Tax Credit

Put the Newly Enacted Tax Credit Legislation to Work for You

If you are considering buying your first home, we have good news for you.  Now may be a great time to make your move.

For a limited time, qualified first-time buyers may receive a tax credit up to $8,000 as part of the American Recovery and Reinvestment Act 2009.

If you plan to live in the home as your primary residence and have not owned a home during the past three years, you may qualify for the tax credit.  As long as the home remains your primary residence for at least three years (The IRS says that, generally, your principal residence will be the home where you spend the majority of your time. But this isn't the only test; other factors may be relevant to the determination of “primary residence”), you will not have to repay this tax credit.

Facts About the Tax Credit:

First-Time Homebuyer Tax Credit of 2009

Enactment

• The first-time homebuyer tax credit of 2009 applies to all principal residences purchased from January 1, 2009 through November 30, 2009, both dates inclusive.
• The American Recovery and Reinvestment Act of 2009 created the 2009 first-time homebuyer tax credit by amending the Housing and Economic Recovery Act of 2008.
• The 2009 first time homebuyer tax credit will be found at Section 36 of the Internal Revenue Code (current IRC Section 36 is to be renumbered Section 37).

The Tax Credit

• In the case of an individual who is a first-time homebuyer of a principal residence, there shall be allowed as a credit against tax an amount equal to 10% of the purchase price of the residence.
• The tax credit cannot exceed $8,000.
• In the case of married individuals filing separately, the tax credit cannot exceed $4,000 each.
• If two or more individuals who are not married purchase a principal residence, the amount of the credit may be allocated based upon contribution to purchase price, ownership interest or any other reasonable means. For example:
  

  “A” contributes $45,000 and “B” contributes $15,000 towards the $60,000 purchase price of a residence. Each owns one-half interest in the residence as tenants in common. “A” and “B” may allocate the $6,000 credit three-fourths to “A” and one-fourth to “B” based on their contributions, one-half to each based on their ownership interests in the residence, or using any other reasonable method.

• Full Tax Credit: Single individuals with income up to $75,000 and married couples with income up to $150,000 will qualify for the full tax credit.
• No Tax Credit: Single individuals with income of $95,000 or more and married couples with income of $170,000 or more do not qualify for the tax credit.
• Partial Tax Credit: A partial tax credit will be available for individuals with income between $75,000 and $95,000 and couples with income between $150,000 and $170,000.
• Use Form 5405 “First-Time Homebuyer Credit” to claim the tax credit.

Get Started Now

Take your first step by asking your tax advisor if you are eligible and then contact the Csira Group to help you find the right home at the right price.

Download the IRS-Form-5405