$8,000 Tax Credit for First Time Homebuyers Most importantly, the IRS defines a First Time Homebuyer as Taxpayers who have not owned another home at any time during the three years prior to the date of purchase. Who Can Claim the Credit? In general, you can claim the credit if you are a first-time homebuyer. You are considered a first-time homebuyer if: - You purchased your main home located in the United States after December 31, 2008, and before December 1, 2009.
- You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.
- If you constructed your main home, you are treated as having purchased it on the date you first occupied it.
- Your main home is the one you live in most of the time. It can be a house, houseboat, house trailer, cooperative apartment, condominium, or other type of residence.
Who Cannot Claim the Credit? You cannot claim the credit if any of the following apply. - Your modified adjusted gross income is $95,000 or more ($170,000 or more if married filing jointly).
- You are a nonresident alien.
- Your home is located outside the United States.
- You acquired your home by gift or inheritance.
- You acquired your home from a related person. A related person includes:
- Your spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.).
- A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation.
- A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interest.
Amount of the Credit Generally, the credit is the smaller of: $8,000 if you purchased your home in 2009, but only half of that amount if married filing separately, or 10% of the purchase price of the home. You are allowed the full amount of the credit if your modified adjusted gross income is $75,000 or less ($150,000 or less if married filing jointly). The phase-out of the credit begins when your MAGI exceeds $75,000 ($150,000 if married filing jointly). The credit is eliminated completely when your MAGI reaches $95,000 ($170,000 if married filing jointly). Repayment of Credit For Homes Purchased in 2009 You must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation. You repay the credit by including it as additional tax on the return for the year the home ceases to be your main home. If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit. If you and your spouse claim the credit on a joint return, each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. Exceptions. The following are exceptions to the repayment rule. - If you sell the home to someone who is not related to you, the repayment in the year of sale is limited to the amount of gain on the sale. (See item 8 under Who Cannot Claim the Credit for the definition of a related person.) When figuring the gain, reduce the adjusted basis of the home by the amount of the credit.
- If the home is destroyed, condemned, or disposed of under threat of condemnation, and you acquire a new main home within 2 years of the event, you do not have to repay the credit.
- If, as part of a divorce settlement, the home is transferred to a spouse or former spouse, the spouse who receives the home is responsible for repaying the credit. If you die, repayment of the credit is not required.
If you filed a joint return and then you die, your surviving spouse would be required to repay his or her half of the credit. Internal Revenue First-Time Home Buyer Credit Information Center IRS First-Time Homebuyer Credit Form 5405 Instructions for Non-Married Persons who Co-Own a house and want to take the credit |