Great Advice For First Time Home Buyer Tax Credit

Introduction

First time home buyer tax is form of tax credit that has being made available for you if you bought a home for the first time in 2008,2009 and 2010.The buyers that are eligible have to have made the purchase within the given timeline and they have to show that the house bought is their principle residence.

Step 1

Buying your first home is exciting but can also leave a dent in your finances, however this does not have to be the case as you can get a first time buyer tax credit when purchasing your first home. You will do this by claiming a new home buyer deduction that lowers your tax liability. If you normally just take the standard deduction on your tax return, you may need to itemize to receive all of the deductions possible.

The first-time buyer tax credit is a tax credit for individuals and couples who purchase a new home after April 8, 2008, and before May 1, 2010.These credit comes in several versions depending on when you bought the home.

Step 2

How the first time buyer tax credit works is that the credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 or $8,000 if you purchased your home in 2009 or early 2010, for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns.

The home purchasers that qualify for the first time buyer tax credit are those bought as your principal residence and of course located in the United States. For a home that you have built from scratch the date of purchase is the day you move in to the house.

Step 3

The first-time buyer tax credit is applicable also to you when you buy a mobile home and affix it on a piece of land. However the credit is not available for you when the mobile home has an inbuilt motor as it is considered personal property and not a principal residence. Nevertheless you can qualify for the credit if you have lived in an RV within the past three years. Vacation homes and rental property do not meet the criteria for this credit.

First time buyer tax credit is designed for buyers who have not owned another residence three years before they purchase a new home. They are the ones considered as first time buyers but this credit is reduced or eliminated when you are a higher income tax earner.

Step 4

First time buyer tax credit is only eligible for you when you are 18years and older at the time you are purchasing the house. This requirement is only necessary for one of the spouses for a married couple and a dependant is not eligible for the credit regardless of their age.

Step 5

The first time buyer tax credit is available for homes purchased after April 8th 2008 and you must have entered into a binding contract to buy the home before May 1 2010 and had closed the deal by July 1st 2010 so as to get the credit. The normal processing time for the first time buyer tax credit returns is 8-12weeks and you do not need to make any follow with the IRS about your claim. 

Tips

According to the First Time Home Buyer Tax Credit 2012 rules, the First-Time Homebuyers Credit is available only to qualified extended duty service taxpayers. First-time home-buyer credit is a great example of funding that's helped to stabilize the housing market. Purchasing your first home can allow for a first time purchase, new home buyer tax break and you may be able to claim a new home buyer deduction. 

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