Pasadena REALTOR Exposes Homebuyer Benefits from Tax Credit

Michael Gentile, California’s Pro Malibu REALTOR explains the benefits of buying a home of first-time homebuyers and long-time homebuyers from the new federal tax credit.

IRS defines current homeowner as someone who used a home for five straight years within the last eight, and a first-time homebuyer refers to someone who has not owned a house for three years before a home purchase. For both, credit amount goes down for joint filers if the modified adjusted gross income amounts to $225,000; no credit at $245,000. The total credit amount relies on home price and your income.

Claiming the Benefit

Image via WikipediaPurchase a new principal residence from Nov. 7, 2009, to April 30, 2010. Settlement until September 30, 2010 is accepted as long as there is a binding contract by April 30. Avoid spending beyond $800,000 on your new house. Submit tax return with attached copy of settlement statement at closing. Contact IRS /tax adviser for additional documentation.

You can apply the credit to either your 2009 or 2010 tax return. First-time buyers may get $8,000 credit, given they purchased a house from Jan. 1, 2009, to Nov. 6, 2009. Income limits are stricter for people who bought a new house beyond November 6.

In claiming the credit on your 2009 tax return, use IRS Form 5405 (to get credit amount). Apply the credit when you file your 2009 tax return (or file an amended tax return). Include documentation of purchase to your return.

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