1.First time home buyers qualify for the $8,000 tax credit. Who is eligible for the $6,500 tax credit?
Qualified move-up or repeat home buyers purchasing any kind of home. Both first time and move up home buyers must have a signed agreement of sale on or before April 30,2010 and must settle on the property on or before June 30, 2010.
2. What is the definition of a move-up or repeat home buyer?
A person who has lived in the same home for a least 5 consecutive years of the 8 years prior to purchase date. For married taxpayers the law applies to both spouses. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
3. How is the amount of tax credit determined?
It is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.
4. Are there any income limits for claiming the tax credit?
Yes. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.
5. What types of homes qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses or condominiums, mobile homes and houseboats.
6. I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. A principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house.
7. Is there a way to access the tax credit money sooner than waiting to file a 2009 or 2010 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.
If you have more specific questions about the tax credit we strongly encourage you to to consult a qualified tax advisor or legal professional about your unique situation.