The first-time homebuyer credit is a one-time refundable credit for purchases made during 2010. The credit is the lesser of $8,000 ($4,000 for Married Filing Separately) or 10% of the purchase price and applies to homes purchased 1/1/2010 – 4/30/2010. If the sale was closed before 10/1/10, the home qualifies provided a written binding contract to purchase it before 7/1/2010 was entered into before 5/1/2010. The credit is available for principal residences located in the US and is phased out for higher income taxpayers (Adjusted Gross Income of $145,000 Single/head of household/married filing separately and $245,000 married filing jointly). No credit is allowed if the purchase price exceeds $800,000 or if the house is purchased from a related party.
Long-time residents of the same principal residence may be treated as first-time homebuyers but their credit is equal to the lesser of $6,500 ($3,250 married filing seperately) or 10% of the purchase price.
A first-time homebuyer is an individual (or a married couple) who had no present ownership interest in a principal residence during the three-year period ending on the date of purchase of the principal residence to which the credit applies. Long-time residents are an individual (or married couple) who have remained in the same principal residence for any five consecutive years during the eight-year period ending on the date of the purchase of the principal residence to which the credit applies and will become their new principal residence.
Taxpayers filing for the credit are not allowed to file their tax returns electronically because there is a significant amount of paperwork that must be submitted with the Form 1040. The following documents must be filed with the return:
- signed copy of the settlement statement showing all parties’ names, property address, sales price and date of purchase
- for newly constructed homes with no settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and certificate date
Long-term residents must also include copies of ONE of the following for the FIVE consecutive years of the eight-year period ending on the purchase date of the new home:
- Form 1098, Mortgage Interest Statement OR
- Property tax records OR
- Homeowner’s insurance records
Homes purchased after April 30, 2010 – these taxpayers who qualify for the credit under the binding contract exception should also attach:
- copy of the pages from a signed contract to make a purchase showing all parties’
names and signatures, the property address, the purchase price and the contract date.
Long-time residents of the same principal residence may be treated as first-time homebuyers but their credit is equal to the lesser of $6,500 ($3,250 married filing seperately) or 10% of the purchase price.
A first-time homebuyer is an individual (or a married couple) who had no present ownership interest in a principal residence during the three-year period ending on the date of purchase of the principal residence to which the credit applies. Long-time residents are an individual (or married couple) who have remained in the same principal residence for any five consecutive years during the eight-year period ending on the date of the purchase of the principal residence to which the credit applies and will become their new principal residence.
Taxpayers filing for the credit are not allowed to file their tax returns electronically because there is a significant amount of paperwork that must be submitted with the Form 1040. The following documents must be filed with the return:
- signed copy of the settlement statement showing all parties’ names, property address, sales price and date of purchase
- for newly constructed homes with no settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and certificate date
Long-term residents must also include copies of ONE of the following for the FIVE consecutive years of the eight-year period ending on the purchase date of the new home:
- Form 1098, Mortgage Interest Statement OR
- Property tax records OR
- Homeowner’s insurance records
Homes purchased after April 30, 2010 – these taxpayers who qualify for the credit under the binding contract exception should also attach:
- copy of the pages from a signed contract to make a purchase showing all parties’
names and signatures, the property address, the purchase price and the contract date.
Special rules apply for military personnel stationed outside the U.S. for at least 90days between the dates of 1/1/2009 and 4/30/2010.
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