In a September 2009 press release (IR-2009-083), the IRS clarified some important points about the first time home buyer tax credit.
$8,000 Tax Credit Info
This article discusses several points clearly answered by the IRS in that announcement and provides links to more information about the $7,500 and $8,000 amounts available to first time home buyers, including links to more information about IRS Form 5405.
$8,000 First Time Home Buyer Tax Credit
The $8,000 tax credit can be a little confusing because the instructions for it are lumped in with the instructions for the $7,500 tax break available to home buyers who purchased qualifying homes in 2008. The article $7,500 & $8,000 First-Time Homebuyer Tax Credits clarifies differences between the two amounts.
Obama Economic Stimulus Rebate – 8,000 Tax Credit, Government Stimulus Incentive
Barack Obama authorized the $8,000 tax credit for first-time home buyers upon signing the economic stimulus plan in February 2009, and it is only a limited-time U.S. government stimulus incentive. The last day to purchase a home for purposes of claiming the 1st time home buyer tax credit is November 30, 2009. Furthermore, the tax credit can only be claimed on a 2008 or 2009 individual income tax return.
These points are discussed in further detail in the article $8,000 First Time Home Buyer Tax Credit Deadline.
Questions about 2009 Home Purchases & $8,000 Tax Credits
In IRS-2009-083, the IRS clarified the following points for taxpayers:
- Can a home purchase credit be claimed in advance of a closing date? IRS answer – No, the credit cannot be claimed until the purchase is complete.
- What happens if a person’s tax liability is less than the tax credit? IRS answer – Luckily, the credit is fully refundable. This means that it will paid to the taxpayer whether or not the taxpayer’s tax liability exceeds the credit. For example, a taxpayer who owes only $2,000, but qualifies for the $8,000 credit, will receive a $6,000 refund check from the IRS.
- Can individuals take the tax credit on vacation homes or rentals? IRS answer – No, the credit can only be claimed upon the purchase of a qualifying primary residence. Vacation homes and rental properties do not count.
- Can homeowners get the $8,000 credit for new construction? IRS answer – Yes. The credit is available to taxpayers who build their own homes; however, the taxpayer must occupy the new home before December 1, 2009.
- Can U.S. individuals get this government stimulus incentive for purchasing the home from a son, daughter, or parent? IRS answer – No. Home purchases between close relatives do not qualify. A close related includes a child, a spouse, a parent, grandparent or grandchild.
Note: These questions have been adapted from comments received in response to other first time home buyer credit articles posted on Suite101.com.
How to Claim $8,000 First Time Home Buyer Credit – Use Revised IRS Tax Form 5405
A taxpayer who qualifies for an $8,000 first time home buyer credit must claim the credit using IRS Form 5405. Learn where and how to download the most recently revised form in the article IRS Form 5405, First-Time Home Buyer Credit.
Resources:
IRS website, irs.gov
IRS Tax Form 5405, First-Time Homebuyer Credit
First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected (IR-2009-083) retrieved from irs.gov on September 17, 2009.
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