Key Facts About the First-Time Homebuyer reputation

Given the number of population who took benefit of the discrete incentives the Obama administration offered prospective homebuyers the past several years, the field of how to go about claiming the first-time homebuyer credit is likely to be a favorite one this tax season.

According to the Irs, taxpayers

"... May be able to take the first-time homebuyer credit if they purchased a home as a customary residence in 2008, 2009 or 2010. This credit reduces the tax bill or increases the refund depending on the tax owed. The Irs will refund the credit, even if taxpayer owes no tax or the credit is more than the tax owed."

Moreover, taxpayers may be eligible to claim this credit even if they are not first-time homebuyers. In other words, long-time residents purchasing a new home may well capability for the first-time homebuyer credit too. These facts should be well known to tax professionals like certified social accounts and enrolled agents who cover are required to take continuing education tax courses on a quarterly basis. Subjects like the first-time homebuyer credit, and how to help taxpayers take benefit of this tax break, have come to be an integral part of tax continuing education.

Claiming the First-Time Homebuyer Credit: Key facts

Here are several facts the Irs wants Cpas, Irs enrolled agents and all other tax preparers to know when advising clients on the process of claiming the credit:

(1) Taxpayers must have bought - or executed a binding covenant to buy - a main residence settled in the U.S. On or before April 30, 2010. If the taxpayer entered into such a covenant by April 30, 2010, they would need to have closed on the home on or before September 30, 2010.

(2) Eligibility for first-time homebuyer status requires that the taxpayer, not have owned someone else primary residence while the three years prior to the date of purchase.

(3) In a similar vein, to qualify as a long-time resident homebuyer the taxpayer must have lived in the same residence for 5 years while the 8-year duration that ended on the date of the new home purchase.

(4) The maximum credit for a first-time homebuyer is ,000. For married taxpayers filing separately, the number of the credit is ,000. The maximum credit for a long-time resident homebuyer is ,500.

(5) Taxpayers are required to file a paper return and attach Form 5405, First-Time Homebuyer credit and refund of the Credit, along with relevant documents to verify the electronically.

(6) New homebuyers are required to affix a copy of the settlement statement used while the purchase of the home. For buyers of a newly constructed home, the dated certificate of occupancy must be attached. Mobile home purchasers unable to retrieve the settlement statement should attach a copy of the sales contract.

(7) Long-time resident claiming the credit are encouraged by the Irs recommends to comprise documentation that covers the five-consecutive-year duration (e.g., Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, asset tax records or homeowner's assurance records)

(8) Members of the troops and federal employees serving covering the U.S. Are automatically granted one additional year to buy a primary residence in the U.S. And qualify for the credit.

Summary of the First-Time Homebuyer credit by Year

Below is a summary of some of the key facts of the first-time homebuyer credit that pertain to the year in which the credit was claimed. The details are a accepted part of most tax Cpe courses on the field of up-to-date tax breaks under the Obama administration.

For 2008: up to ,500, the credit is paid back over 15 years.

For Jan - Nov 2009: up to ,000, the credit does not need to be paid back.

For Dec 2009 - April 2010: up to ,000 for first-time buyers, the credit does not need to be paid back.

For Nov 7, 2009 - April 2010: up to ,500 for "long-term residents" buying a new home, the credit does not need to be paid back.

Until April 30, 2011: homebuyer credit continues to be ready for excellent members of the U.S. Uniformed services.

Irs Circular 230 Disclosure

Pursuant to the requirements of the Internal revenue assistance Circular 230, we familiarize you that, to the extent any advice relating to a Federal tax issue is contained in this communication, along with in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax linked penalties that may be imposed on you or any other man under the Internal revenue Code, or (b) promoting, marketing or recommending to someone else man any transaction or matter addressed in this communication.

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