First time and Second Time Home Buyer's credit

I hope to be able to use this space to expand on some of our tax tips as well as to keep you updated on various topics of interest.



Since we are coming up on a deadline, I thought I would give you some additional information about the first time home buyer's credit (FTHBC) as well as the existing home buyer's credit (EHBC).



The FTHBC came into being originally on April 8, 2008 and ran through December 2009. that bill was subsequently amended and extended until april 30, 2010 with closing occuring by June 30, 2010. If you were eligible for the credit as it was first established and took it, then you will have to pay back the credit over a 15 year period. Homes purchased prior to January 1, 2009 are only eligible for this credit.



For calendar year 2009 and part of 2010, the credit has been changed. If you purchase your home after January 1, 2009 and no later than April 30, 2010 and close by June 30, 2010, the credit for which you qualify does not need to be repaid.



The credit is equal to 10% of the purchase price of the home not to exceed $8,000. The total cost of the home cannot exceed $800,000. The credit will also reduce if your adjusted gross income is more than $75,000 for a single person or $150,000 for a married couple filing a joint return. Two unrelated people can buy the same house and each claim up to $4,000 if they otherwise qualify.



A first time home buyer is a person who has not own a home in their own name for the past three years. The person cannot be married to someone who has owned a home in the last three years. By that I mean, if your spouse bought the house and has lived in it and now you get married and you never owned a home but you buy part of your spouse's home, or you sell the spouse's home and buy one together, you DO NOT QUALIFY!!

To be considered an existing home buyer you are your spouse, if you are married, must have lived in the same principal residence for any consecutive five year period in the last eight years that ends on the date the new home is purchased. the rules are the same as above but the maximum credit is $6,500.

In both cases your must file a paper return and attach Form 5405. You must also include the HUD statement or other documentation verifying the purchase. There has already been many cases of fraud and the government is trying to prevent further fraud.

If you are claiming the EHBC, you should also include proof that you previous owner a home such as a copy of your mortgage statement, insurance records or property tax records showing you owned the home. For the FTHBC, you should include copies of leases or other items showing rent.

If you still want some further information and examples, go to www.irs.gov/recovery. Links within the IRS include:1040 Central and First-Time Homebuyer Credit information Center.