In an effort to boost the economy, several tax credits programs were created. The first program was for new homeowners. For tax year 2008, the maximum available credit was $7,500. For tax year 2009, the credit was increased to $8,000. For married couples filing individually, each claims one-half of the credit on their separate forms.
However, this maximum amount does not apply to long-term residents who plan on purchasing a new house. For these individuals, the maximum allowable tax credit is only $6,500. Divide this amount by two and you get the maximum allowable tax credit for couples that are long-time residents but who choose to file their returns individually.
When it comes to tax credits, the rules are often strictly construed in favor of the government and against the tax payer. An example of this rule is the denial of tax credit to individuals who purchase homes that cost over $800,000.
The first-time buyer of a home is the person who in the last three years has not been the owner of another residence. As for the married couples, or newlyweds, they are considered also first-time home buyer if neither of them has previously owned another primary residence.
There are some exceptions concerning those in the U.S. army or in Foreign Service on official duty outside America. They have the right to an additional year in order to qualify for a credit.
Vacation home owners or those who have properties for rent can also qualify for the tax credit. In this case, the condition that they should not own a primary residence will also apply.
For those who have bought their houses in 2008, the tax credit is must be paid back over a period of 15-year periods. This amount should be repaid in 15 equal installments.
The tax credit comes into play when the buyer files their federal tax return in the year following the purchase. If the credit was for a 2008 purchase, then one-fifteenth of the tax credit amount becomes an additional tax for the next fifteen years of tax filings. If the buyer sells the property before the fifteen years is over, then the remaining tax credit amount not yet repaid becomes fully due in that year.
However, this maximum amount does not apply to long-term residents who plan on purchasing a new house. For these individuals, the maximum allowable tax credit is only $6,500. Divide this amount by two and you get the maximum allowable tax credit for couples that are long-time residents but who choose to file their returns individually.
When it comes to tax credits, the rules are often strictly construed in favor of the government and against the tax payer. An example of this rule is the denial of tax credit to individuals who purchase homes that cost over $800,000.
The first-time buyer of a home is the person who in the last three years has not been the owner of another residence. As for the married couples, or newlyweds, they are considered also first-time home buyer if neither of them has previously owned another primary residence.
There are some exceptions concerning those in the U.S. army or in Foreign Service on official duty outside America. They have the right to an additional year in order to qualify for a credit.
Vacation home owners or those who have properties for rent can also qualify for the tax credit. In this case, the condition that they should not own a primary residence will also apply.
For those who have bought their houses in 2008, the tax credit is must be paid back over a period of 15-year periods. This amount should be repaid in 15 equal installments.
The tax credit comes into play when the buyer files their federal tax return in the year following the purchase. If the credit was for a 2008 purchase, then one-fifteenth of the tax credit amount becomes an additional tax for the next fifteen years of tax filings. If the buyer sells the property before the fifteen years is over, then the remaining tax credit amount not yet repaid becomes fully due in that year.
About the Author:
This author has been contributing articles about taxes for the previous two years. In addition, the individual enjoys blogging regarding New York neighborhood topics, like Woodside apartment as well as Bayside rentals.