Outstanding Opportunities For First Time
Outstanding Opportunities For First Time
First time home buyers tax credit Again, the homeowners ownership as well as Business Assistance Act of 2009 was extended to the first time home buyer tax credit up to a maximum of $8,000. This particular section of the act applies only to first time home buyers and they have to be purchasing a primary residence. Vacation homes are not qualified under this program. There is a program for homeowners who have purchased multiple homes, which is up to $6,500 which I will discuss later in this post. To be qualified, the first time home has to be bought following Jan. 1, 2009, and before May 1st, 2010. If a contract that is binding is in hand by March 30, 2010,, then the homeowner has until June 30, 2010 to close the transaction. This new law, the Act has established the maximum income limit at $125,000 for individuals and $225,000 for a married person in the event of filing jointly. The first time home buyer may purchase new construction or a resale house in both cases, since either of these will be eligible for tax credits. The purchase date has been carefully specified as the closing date. After closing, the title of the property will pass to the first-time homebuyer. Attention young people, because you may not qualify for the tax credit program in the event that your parents are declaring you as a dependent. I've made reference to a first time home buyer many times in this section this paragraph, which means the buyer has not owned a principal residence in the last three months we buy any house prior to purchasing this property. Be cautious about this, since it applies to your spouse. Both the spouse and you must satisfy the first time homeowner qualification in order to receive this tax deduction. The IRS is watching this rules very closely, considering that last year more than 500 under age folks claimed the deduction and one was only 4 years older. Needless to say they will vigorously prosecute any violation. The method for determining the amount of the tax credit is by taking 10% of the purchase price of the home. For instance, if you buy property with a sales price of $70,000 , your tax credit would be equivalent to $7,000 but not the full number of $8,000. If the price of sale is $100,000, then you are eligible for the full tax credit of $8,000 but not more. While the above scenarios are easy to follow, be sure to talk to your tax advisor for specifics prior to making a final decision as your specific circumstances may be different. Be aware that you cannot claim the tax credit for your future planned purchase, but you have to have closed on and taken title to the property before the 30th of June, 2010 in order to be eligible. The tax credit will be redeemed at the close of the calendar year when you pay your taxes on your income. In order to get a tax credit earlier you may change the amount of dependents that you have claimed to increase your take-home amount each month by the total amount of the tax credit you'll get. I strongly suggest that you do not alter your dependents without consulting a tax advisor to ensure that it's properly calculated. An error in your dependent status could result in a significant tax bill at the end of the year. A further restriction on the new home purchase is that the property is not able to be purchased from relatives, or any relatives of yours, like grandparents or parents. This applies to your lineal descendents like children and grandchildren. Now here is a really excellent bargain. Let's say you only owed $5,000 in your tax on income for the current year. If that's the case, how can you take the tax deduction of $8,000 if it was just $5,000. You can do it easily, simply apply for the deduction of $8,000 and you'll actually receive a cash payment of your original $5,000 plus an additional refund by Uncle Sam for $3,000. So how do you beat this, surely? Tax Credit for Repeat Home Buyers Credit (Move Up) The Homeownership, and Business Assistance Act of 2009 includes a tax credit that is $6,500 for repeated home buyers (a returning homebuyer is an existing home owner) buying a primary residence between through November 6 to April 30 2010. The period can be extended until June 30, 2010, if a binding contract of sale is signed and ratified before April 30, 2010. Repeat home buyers can buy any kind of house to claim the lower tax credit to the extent of $6,500. A move-up buyer is defined as a long-time resident when he/she lived in and owned the home for at least 5 of the last 8 years prior to buying the new house. For couples who are married, both must be able to meet the criteria above. It's not a requirement to have the new house higher than the previous one, therefore some buyers may be called move-down buyers as opposed to move-up buyers. It is expected that most will be move-up buyers.

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