As April 15 Nears, Home Buyer Tax Credit Comes Into View
With the deadline for tax season approaching, home builders should make qualified first-time home buyers aware of the methods they can use to claim the recently enacted $8,000 home buyer tax credit.
The tax credit may be claimed by buyers who have not owned a home in the previous three years prior to the purchase. The credit amount is equal to 10% of the purchase price, up to a maximum of $8,000. The credit is refundable — it can be claimed even if the home buyer has less than $8,000 in tax liability, and it is a true tax credit.
Provided that the home buyer uses the home as a principal residence for at least three years, the credit does not have to be repaid to the IRS. Qualifying home purchases must occur on or after Jan. 1, 2009 and before Dec. 1, 2009. The program is subject to income phaseouts, which begin at $150,000 modified adjusted gross income for married couples and $75,000 for single taxpayers.
More details can be found at www.federalhousingtaxcredit.com.
After purchasing the home, home buyers can claim the credit by completing IRS Form 5405. It should be noted that buyers cannot complete this form, and claim the tax credit, before they complete the home purchase, which in most cases occurs when the title of the property transfers. The amount of the tax credit, as calculated on this form, is entered on line 69 of the IRS 1040 income tax return.
Buyers have several options in claiming the tax credit in order to accelerate the time they receive their expected refund:
- Buyers who complete their home purchase prior to April 15, 2009 can claim the purchase on their 2008 income tax return, as filed on or before April 15.
- Buyers can also file for an income tax filing extension for tax year 2008, so that home purchases completed in the months after April 15 can also be claimed on the 2008 return.
- Or home buyers can claim a qualified 2009 purchase on their 2009 income tax return, as filed in early 2010.
It is recommended that home buyers work with a tax professional to determine how they can claim the tax credit to receive their refund as early as possible. In all cases, Form 5405 cannot be filed with the IRS until after the purchase is complete.
For further information, e-mail Robert Dietz at NAHB, or call him at 800-368-5242 x8285; or contact Brooke Fishel x8061.
Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.