The Worker, Homeownership, and Business Assistance Act of 2009 was an attempt to motivate the moribund market, and offers new home buyers a tax credit. This credit is generally around ten percent of the cost, up to a total of $8,000.
Under this provision, the first-time home buyer is defined as somebody who did not own a principal home within three years before the qualifying home was purchased. This applies to the person’s spouse, as both married taxpayers’ home ownership history will be verified.
Taxpayers’ dependents and those younger than 18 years of age are not eligible for the tax credit program. Also, the tax credit is applicable only to homes not more than $800,000, and will be paid back if the property is sold or once it is no longer the buyer’s principal home within three years after it was acquired.
Income limits of $75,000 for individual taxpayers and $150,000 for married or joint filers are eligible for the refundable tax credit if the primary residence was purchased between 01 January 2009 and 06 November 2009. Tax credit also applies to those with income not exceeding $125,000 for single taxpayers and $225,000 for married couples if the home was purchased between 06 November 2009 and 30 April 2010.
Official forms have to be completed and some documentations are required for buyers to claim the tax credit. They need to complete IRS Form 5405, which has to be attached with the HUD-1 settlement form.
Sometimes the HUD-1 is not relevant, in which case you need to use a copy of the certificate of occupancy. It you bought your place in 2010, you also have the ability to claim it in either 2009 or 2010.
If you want to receive the tax credit, you need to have bought the place on or after the 01st of January 2009 and on or before the 30th of April 2010. If your binding sales contract was signed by 30 April 2010, your transaction must be completed before the 30th of June 2010.
A recent development has been a suggestion the deadline to finalize the purchase is set at the 30th of September 2010. This is because the credit has stimulated sales and there are too many to process.
This author has been contributing articles on taxes for the last three years. Furthermore, the author is fond of blogging regarding NYC real estate topics, such as apartments in Midtown along with Sutton Place apartments.