$7500 credit for First Time home buyers

I had two buyer clients ask me about the tax credit that is being mentioned in the papers. You must be a first time buyer and there are other restrictions.

Below is a little information about the credit and a few contact numbers for more information..

IRS Issues Guidance on Tax CreditThe IRS has released IR-2008-106, providing some guidance about how individuals who utilize the new $7500 first-time homebuyer tax credit will reflect the credit on their tax returns and receive the benefit from any refund. The notice reinforces the fact that taxpayers will be required to repay the credit, starting with their tax return for 2010, which will be filed in 2011.
The IRS is designing a new Form 5405 for those who utilize the credit. The new form will be included in the Form 1040 packet and filing instructions that are distributed in late December and early January. The new form is not yet posted on the IRS website. While it has not yet officially announced its plans, the IRS will likely use the information on this new form to track the group of taxpayers who use the credit and provide them with instructions on how to make the repayment. This guidance will be issued later.

HOUSING AND ECONOMIC RECOVERY ACT OF 2008
First�time Homebuyer Tax Credit FEATURE
H.R. 3221
Housing and Economic Recovery Act of 2008
Amount of Credit
Ten percent of cost of home, not to exceed
$7500
Eligible Property
Any single�family residence (including condos, co�ops) that will be used as a principal residence.
Refundable
Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).
First�time Homebuyer Only
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
Recapture
Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale.
Effective Date
Purchases on or after April 9, 2008
Termination
July 1, 2009




Contacts: Linda Goold, 202-383-1083
Contacts: Megan Booth, 202-383-1222
Contacts: Helen Devlin, 202-383-7559