Introduction
Home buyers credit is for anyone who has purchased a home in 2008, 2009 or 2010 as your main residence. This credit will either give you a larger refund or reduce the amount of tax you owe.
The maximum amount of the credit depends on the year the home was bought and may need to be paid back within a 15 year time frame. So if someone took the maximum amount they would be paying $500 a year additional taxes to repay the home buyers credit. If you sell your house before the 15 year period than you will need to repay the home buyers credit back completely.
Another example of where an individual would have to repay back the credit is if within 36 months the house is not your main residence anymore. To figure out the repayment of the home buyers credit you will need to fill out Form 5045.
Home Buyers Credit Amounts
Here is a breakdown of the home buyers credit for each year. In the year 2008 the maximum amount was $7,500 and is paid back within 15 years. If your house was bought between January and November of 2009 the credit is up to $8,000 and does not need to be paid back. For homes bought between November 7, 2009 and April 10, 2010 the long term home buyers credit is up to $6,500 and does not need paid back. Homeowners who purchased between December 9, 2009 and April 2010 the credit amount is up to $8,000 without the need to be paid back.
The amount of the home buyers credit is figured by 10% of the value of what the home is. There is a upper limit on what the value of a home can be for the home buyers credit. No credit will be given on a home that exceeds the value of $800,000.
Home Buyers Credit Terminology
What is the difference between a first time buyer and a long term resident home buyer? A first time buyer is someone who has never purchased a home before for their main residence. The long term resident home buyer is a person who already owns a home who buys another home. To qualify the individual must live in the home for at least five consecutive years.
What is considered a primary residence? A primary residence is the main home that you live in the majority of the time. If a person has a vacation property or a rental they have bought they could qualify for the home buyers credit as long as the property was bought within three years before the purchase of their new home.
When Does The Home Buyers Credit Expire?
The home buyers credit is no longer available and has expired on May 1, 2010. For those people who are a member of the military and service men they have received an extended period of time to claim the home buyers credit. Members of the military had an additional year for the credit until May 1, 2011.
If you was not able to take advantage of the home buyers credit you can still find relief with the provision President Obama included in The American Jobs Acts. The new provision allows homeowners to refinance their homes at very low rates through FHA and government programs.
