- The lesser of 10% of the purchase price of the home or $6,500. Make sure you provide a copy of your HUD-1 closing statement to your tax advisor so that he can claim the appropriate amount on your tax return.
Who is Eligible?
- Homeowner(s) who has purchased a home or constructed a new home between November 1, 2009 and April 30, 2010 with closing prior to June 30, 2010.
- Homeowner who has owned and resided in the same home for at least 5 consecutive years of the 8 years prior to purchase date. For married homeowners both must meet the above requirement.
What Homes Qualify?
- Any home used as a principal residence. Second homes and vacation homes do not qualify.
- Any new or previously constructed home, modular home, manufactured home, condo, or townhouse on your land or leased land.
Are there income limits?
- Modified Adjusted Gross Income up to $125,000 for single or head of household (single parent with children living with him/her); $250,000 for married homeowners/joint tax filers. Credit is subject to phase-outs - review IRS Form 5405 to determine the size of your credit. The credit will generally equal 10% of the purchase price up to a maximum of $6,500.
I heard the credit is refundable. What does that mean?
- Refundable means the credit can be claimed on your tax return even if you, as taxpayer, have little or no federal income tax to offset the full amount of the credit. If this applies to you, the IRS will include the unused portion of the credit in your income tax refund amount either paid by check or direct deposit to you.
- Should you sell this home within 3 years of claiming or receiving the credit you may have to pay the IRS back a portion or all of the received credit.
For which tax year is the credit available?
- You can only claim the credit once in either 2008, 2009, or 2010. Consult your tax advisor as to when to claim the credit.
What costs associated with the home purchase count towards the credit?
- Any cost of construction, necessary for occupancy (doesn't include the purchase of personal property or contents of home), and necessary closing costs. Consult IRS Form 5405 and your tax advisor for further details.
Can I purchase the home from related parties?
- No. You cannot purchase the home from other family members (siblings), ancestors (parents, grandparents, etc), lineal descendants (children, grandchildren, etc), your spouse, or spouse's family members (anyone who would be considered and "in-law").
Where can I learn more?
- Always consult your tax advisor with regards to tax planning specific to your facts and circumstances.
- The IRS website at http://www.irs.gov
- IRS Form 5405 at http://www.irs.gov/pub/irs-pdf/f5405.pdf?portlet=3 and corresponding instruction to the form at http://www.irs.gov/pub/irs-pdf/i5405.pdf?portlet=3
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