Income Tax Deadline is Approaching Fast. 4 Common Questions for Consumers Who Purchased Homes and Want Tax Credit
Tax time has come again and before we know it, the April 15th deadline will be here in a matter of weeks. For those who have been fortunate enough to purchase a home within the past year, here are some of the most common questions regarding the home buyer tax credit.
How Is the tax credit claimed?
The home buyer will claim the tax credit during the filing of their federal income tax. If you purchased a qualifying home in 2009 or 2010, you will need to complete IRS form 5405. In addition, you will need to enclose a copy of the settlement statement. Normally the settlement statement is a properly executed Form HUD-1.
Note: If you have purchased a newly constructed home of mobile home and the HUD-1 is not provided, you may include an executed retail sales contract for mobile homes or a copy of the certificate of occupancy for newly constructed homes.
Does the home buyer have to sell their current home in order to qualify for the $6500 repeat home buyer tax credit?
As long as this home is not used as the primary residence, it does not have to be sold for the buyer to qualify for the $6500 credit. The tax payer may continue to own both homes however, they must use the new home as their principal residence and live there for at least 36 months or repay the tax credit.
Do married couples both have to meet eligibility requirements to claim the credit even if their taxes are filed separately?
Yes, as mentioned in one of our previous post "Founders Of Home Buyer Tax Credit Web Site...Marriage Penalty", both spouses must meet eligibility requirements to qualify for the first time buyer's credit of $8,000 and the repeat buyer credit of $6,500. This is required even if the taxes are filed separately. On the contrary, if an unmarried couple purchases a home together, only one has to qualify and the other can still claim the full credit.
Do all home purchases need to be completed by the April 30th deadline to be eligible for the credit?
There are only two exceptions to this deadline and they are as follows:
If a buyer enters into a binding contract by April 30, 2010 then that buyer will have until June 30, 2010 to complete the purchase.
If a buyer is apart of the uniformed services, Foreign Service or employees of the intelligence community that have been on qualified extended duty outside of this country within the past 90 days between January 1, 2009 and April 30, 2010, the deadline will be extended for one year (April 30, 2011).