The First-Time Homebuyer Credit (Revisited)
By Tessa Montgomery of Aiello-Goodrich-Teuscher
Over the past two years, the First-Time Homebuyer Credit (FTHBC) has had many different meanings. In 2008, the credit was an interest free loan for up to $7,500 to be paid back by the taxpayer in equal installments over 15 years. At first, people looking to buy their first home considered this a fairly nice incentive; that is until the new FTHBC for 2009 came out.
The current FTHBC for tax year 2009 offers the smaller of $8,000 ($4,000 if married filing separately) or 10% of the purchase price of the home for qualifying taxpayers that usually does not need to be paid back. The requirements are as follows:
- The home was purchased after December 31, 2008 and before May 1, 2010 (this gives the purchaser until July 1, 2010 to close).
- The taxpayer (and spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
- The home cannot be acquired by gift or inheritance.
- The home cannot be acquired from a related person.
- The home must be purchased in the United States.
- The purchase price of the home cannot exceed $800,000.
- The AGI of the taxpayer cannot exceed $95,000 ($170,000 if married filing jointly) if the home was purchased before November 7, 2009.
- The AGI of the taxpayer cannot exceed $145,000 ($245,000 if married filing jointly) if the home was purchased on November 7, 2009 – May 1, 2010.
If the taxpayer meets all of the above requirements and is claiming the credit on the 2009 tax return, the following is required when filing:
- Form 5405 (First-Time Homebuyer Credit) must be completed and turned in with the 1040.
- A copy of the settlement statement showing all the parties’ names and signatures, the property address, sales price and date of purchase.
- The tax return cannot be e-filed. The 1040, 5405 and settlement statement must be paper-filed, or physically sent into the IRS for proper submission.
Although the requirements can seem confusing, this is a great opportunity for taxpayers looking to, or have recently purchased a new home, and should be taken advantage of. There is also a credit available for long-time homeowners looking to purchase a new home.
