About the $8,000 Tax Credit for Homeowners
- The American Recovery and Reinvestment Act of 2009 covered purchases made before Dec. 1 of that year. However, the Worker, Homeownership and Business Assistance Act of 2009 then extended the deadline to May 1, 2010. It also allowed buyers to qualify even if they hadn't bought a home by the deadline, but had a contract on a home. Those qualifying with a contract had to close on the home by June 30, 2010. That deadline was extended to Sept. 30. As of this writing on December 2010, no further extensions had been issued. However, some service members are eligible for an extension of up to one year.
- The tax credits issued for 2008 home purchases worked like a no-interest loan. They had to be repaid in 15 equal, annual installments, starting with the 2010 tax year, according to the Internal Revenue Service. For 2009 and beyond, the credit doesn't have to be paid back, unless the homebuyer stops using the home as his main residence within three years after the home's purchase.
- To qualify for a tax credit, you must be considered a first-time homebuyer. This is someone who has not owned a primary residence during the past three years. "Long-time residents" could also qualify for a tax credit under the program, but it's less than $8,000. Additionally, homebuyers must have a modified adjusted gross income of no more than $125,000 for individual filers or $225 for joint filers. People with MAGI's of up to $145,000 for single filers and $225 for joint filers can get a reduced tax credit. Lastly, dependents and those under 18 are not eligible, nor are homes purchased for more than $800,000.
- Qualified homebuyers who purchased a house during 2009 could claim the credit on either a 2008 or 2009 tax return. For qualifying purchases made in 2010, taxpayers can claim the credit on either their 2009 or 2010 returns. Credits can't be claimed if a home purchase hasn't closed. Taxpayers must use Form 5405 to claim the credit and file a paper rather than electronic return, according to the IRS website.
