Recently the U.S. House of Representatives signed into effect Obama’s stimulus package which includes a tax credit valued at $78,000 for qualified first time home buyers. According to recent legislative changes, in order to qualify you must not make over $125,000 a year if you are filing as a single person or $225,000 a year if you will be filing your taxes as a couple for purchases made AFTER November 6th, 2009. The income limits were previously $75,000 for single tax payers and $150,000 for couples filing jointly. For purchases made between January 1st 2009 and November 6th, 2009, the old income limits still apply.
The home that you will be purchasing needs to be the home that you will be residing in as your primary residence. Also, you must have not owned a home in the last three years in order to be eligible for this offer.
The tax credit is claimed on your federal income tax return. Once you qualify all you have to do to claim the tax credit money is file it on your next year’s tax return. It is important to keep in mind that you will not actually get any money back from the tax credit until after you file your income taxes in June of 2010.
If you qualify as a first time time home buyer, you must complete IRS Form 5405 to determine your tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or pre-approval is required.
A few other things to keep in mind Is that the tax credit is not eligible if you are purchasing the home from someone in your family. However, the tax credit can be applied to virtually any type of home including townhomes, manufactured homes, houseboats and condominiums. This flexibility means that every type of first time home buyer will be eligible to take advantage of this cash saving tax credit.
President Obama’s tax credit has been welcomed with open arms by the housing industry. The credit has attributed to a direct increase in new home sales. Also, the effects of the tax credit are believed to improve the housing market for years to come as many of the people who bought homes with the credit will eventually move up and purchase more expensive homes.