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from Local Attorney, Michael H. Wasserman

Monday, December 7, 2009

IRS Providing New Guidance, Forms, to Claim the 1st Time Home Buyers Tax Credit

A new IRS bulletin, released just before Thanksgiving is offering new details that should clarify many of recurring questions about the First Time Homebuyers Tax Credit.

The most important takeaway in that bulletin however is that anyone who closed on their purchase after November 6, intending to claim the tax credit better wait a couple-three weeks until the IRS releases a newly revised Form 5405.

Critical details released last month:

CO-OWNERSHIP SITUATIONS
  • an otherwise qualifying unmarried individual who purchases a home together with someone who does not, can claim the full $8,000 credit.
  • an otherwise qualifying son or daughter who purchases a home with parents who do not qualify can also claim the entire $8,000 credit.
PURCHASE PRICE,INCOME, & AGE LIMITATIONS
  • Single taxpayers earning up to $125,000 in "modified adjusted gross income" and joint filers earning up to $225,000 qualify for full tax credit benefits (up from $75,000/150,000).
  • Singles filers with incomes between $125,000 and $145,000 and joint filers with incomes from $225,000 to $245,000 may be eligible for reduced credits.
  • Purchases cannot cost more than $800,000. This is an uncompromising, "off the cliff" threshold.
  • No one under age 18 can claim the credit, under any circumstances.
  • No one who can be treated as a dependent on anyone else's federal tax filing is eligible for the credit.
ARMED FORCES / DIPLOMAT EXTENSION
  • Members of the armed forces, diplomats, & intelligence personnel serving in foreign countries will get an extra 12 months to buy a home and still qualify for the credit.