Posts Tagged ‘First-Time Homebuyer’

Did You Receive A “First Time Home Buyer Tax Credit” in 2008??

Thursday, February 2nd, 2012

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

This provision of the Federal tax laws went through several iterations from 2008-2011.  A very extensive article on this same subject was published on February 8, 2011 (http://www.billseabrookecpa.com/blog/?p=617 ).  In a nutshell, if you purchased a qualifying personal residence in 2008 and received this tax credit, it was a loan from the Federal government which has to be re-paid in 15 equal installments.  The first installment was due and payable in tax year 2010.  You were also required to complete Federal Form 5405 (“First-Time Homebuyer Credit and Repayment of the Credit”) and attach it to your Federal tax return. 

The tax credit itself carried a requirement that you continued to reside in that home.  Anyone who sold their home, or stopped using it as their main home, may also have to repay the entire credit whether their home was purchased in 2008, 2009 or 2010.   The instructions for Federal Form 5405 should answer all of your questions.  If not, contact the Internal Revenue Service at (800) 829-1040.  (more…)

First Time Home Buyer Credit Repayment

Tuesday, February 8th, 2011

Beginning in 2008 Congress provided a tax credit for those taxpayers who purchased a new or existing home for the first time.  This law went through several iterations from 2008-2010 and you may be affected by the provisions of the tax law IF you received the credit in any of these years. You have also probably already received a CPO3A Notice from the Internal Revenue Service. 

You will need to File Form 5405 (“First Time Homebuyer Credit and Repayment of the Credit”) IF you received the credit from your 2008 Federal tax return or if you received the tax credit in 2009-2010 and the home ceased to be your “main home” within three years of the original purchase date:

  • 2008 – you received a tax credit associated with the purchase on a new home and you had never previously owned a home.  The maximum credit was $7,500.00.  However, this credit is required to be re-paid to the U.S. Treasury, beginning with your 2010 Federal tax return, at a rate of $500.00 year for 15 years;
  • 2009-2010 – for the first ten months of the year the credit increased to a maximum of $8,000.00 but it was only available to first time homebuyers.  Then in November of 2009 Congress extended the tax credit to existing homebuyers and the expiration date.  For existing homebuyers the tax credit credit was equal to 10% of the purchase price of the home, but it was limited to a maximum amount of $6,500.00. There were also maximum adjusted gross income restructions.  The sales contract was required to be signed before May 1, 2010 and the sale was required to be completed by June 30, 2010.   In 2010 the expiration (qualification) date was extended to September 30, 2010. 
  1. If you have received a CPO3A Notice (the notice number will appear in the upper right hand corner of the form) from the IRS and are not sure what action is required, follow this link:  http://www.irs.gov/individuals/article/0,,id=227895,00.html
  2.  Are any of the following circumstances applicable to your situation?
  •  You have sold the home which you purchased in 2009 or 2010 for which you received the tax credit,    OR
  •  You are no longer using the home as your “main home”

If so, use this link:  http://www.irs.gov/pub/irs-pdf/i5405.pdf  If needed, Federal Form 5405 can be obtained from this website:  http://www.irs.gov/pub/irs-pdf/f5405.pdf 

 Addtional information on this subject follows: (more…)

The American Recovery and Reinvestment Act (ARRA) of 2009

Friday, January 21st, 2011

This post is providing factual information from the Internal Revenue Service regarding the tax benefits for individuals and businesses through the provisions of “The American Recovery and Reinvestment Act (ARRA) of 2009″.  Although the law was signed by President Obama on February 17, 2009 there are still tax benefits available for tax year 2010.  There are two major sections for this post: 1) the “Making Work Pay Credit”, and 2) the other seventeen major tax benefit areas. 

“The bill is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions, including domestic spending in education, health care, and infrastructure, including the energy sector.” (IRS website)

  • The “Making Work Pay Credit” (please note that this is a “refundable” tax credit) 

Many working taxpayers are eligible for the Making Work Pay Tax Credit in 2010. The credit is based on earned income and is claimed on your 2010 tax return when you file your taxes in 2011.

Here are five things the IRS wants you to know about this tax credit to ensure you receive the entire amount for which you are eligible.

  1. The Making Work Pay Credit provides a refundable tax credit of up to $400 for individuals and up to $800 for married taxpayers filing joint returns.
  2. Most workers received the benefit of the Making Work Pay Credit through larger paychecks, reflecting reduced federal income tax withholding during 2010.
  3. Taxpayers who file Form 1040 or 1040A will use Schedule M to figure the Making Work Pay Tax Credit. Completing Schedule M will help taxpayers determine whether they have already received the full credit in their paycheck or are due more money as a result of the credit.
  4. Taxpayers who file Form 1040-EZ should use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Credit.
  5. You cannot take the credit if your modified adjusted gross income is $95,000 for individuals or $190,000 if married filing jointly or more, you can be claimed as a dependent on someone else return, you do not have a valid social security number or you are a nonresident alien.

Visit http://www.irs.gov/recovery for more information about the Making Work Pay Credit. 
  
 Links:

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First-Time Homebuyer Credit

Tuesday, November 24th, 2009

The name for this relatively new tax credit is somewhat misleading.   Although Congress started out in this direction (limiting the credit to those taxpayers who qualified as a “first time homebuyer”) on November 6, 2009 the Worker, Homeownership and Business Assistance Act of 2009 expanded the provisions of the law (Public Law 111-92) to include those  current homeowners who are qualified.  

2008 Federal tax returns required the completion of Form 5405 with the tax credit amount being posted on line #69 of the Form 1040.  If you download the form from the IRS website (http://www.irs.gov) you’ll also find the instructions for the completion of the form plus information regarding who is eligible for the credit and who is not.  Additionally, the 2008 version of the form can only be used for homes that were purchased before November 7, 2009 for which an election was made to claim the credit on the 2008 return.  A new version of the form will be released by the IRS in December 2009 for all qualified home purchases that were made after November 6, 2009 (whether the credit is claimed for 2008 or for 2009) and for all claims on 2009 tax returns for homes that were purchased at any time in 2009.  

First time homeowners can still qualify for a maximum tax credit of $8,000.00.  The maximum tax credit for a current homeowner is limited to a statutory maximum of $6,500.00.  The new law extends the deadline for qualifying home purchases from the original expiration date of November 30, 2009, to April 30, 2010.  Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase which is usually accomplished through the closing process with either a title company or an attorney.

Recent information from the Internal Revenue Service follows:

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