Home buyer tax credit questions answered
Many of you have come here to ask questions about the $8,000 first-time home buyer tax credit and the $6,500 credit for repeat buyers. Many, many, many of you. In the interest of saving us all time, here are some of the frequent questions and their answers:
Q. How long do I have before the credits are due to expire?
You'll need to sign a contract no later than April 30 and close no later than June 30.
Q. How much money are we talking about?
It's a maximum of $8,000 for first-timers and $6,500 for repeat buyers. You get 10 percent of your purchase price up to that amount.
Q. What's the definition of a first-time buyer? A repeat buyer?
A first-time buyer, for the purposes of the eight grand, is someone who hasn't owned a primary residence for at least three years. Married couples trying to get this credit must BOTH qualify as first-timers.
A repeat buyer is someone who has owned (and lived in) a home for at least five consecutive years of the past eight, as measured backward from the purchase of the new digs. Married couples trying to get the $6,500 repeat-buyer credit must BOTH meet the timeline test.
Q. What if I'll hit five years of ownership after April 30 but before June 30? Would I qualify?
Yes, if you time your settlement so it falls after your five-year ownership anniversary.
Q. Do I have to sell my current home to qualify for the $6,500?
No, but you do have to make the new place your primary residence.
Q. I've been a homeowner for the last 10 years -- six years in my first home and four years in my current home. Do I qualify?
Nope, sorry. The legislation says individuals must have been in "the same residence" for "any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence."
Q. I'm building a new home. Does that change anything?
Yes. For new homes, the IRS says, the key date isn't the settlement but when you actually move in.
Q. What do I need to send to the IRS to get my moolah?
Form 5405 and a copy of the HUD-1 settlement statement.
Repeat buyers will also need to provide proof that they met the previous ownership test. "This may include property-tax records, hazard-insurance records or copies of annual mortgage-interest statements filed with their federal taxes," notes columnist Kenneth Harney.
Feel inclined to ask a question? See if I've already answered a similar one here, a post inundated with buyer queries.
You can also find information directly from the IRS here, with links to more information on that page.