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Can You Get Home Buyer Credit?

February 7, 2011

If you bought a home last year, you may be eligible for a tax credit of up to $8,000 when you file your 2010 tax return. But before you start shopping for hardwood floors, make sure you qualify. And even if you are eligible, you’ll need to take extra steps to prove that your claim is legitimate. Congress first enacted a home buyer’s tax credit in 2008 in an effort to revitalize the housing market. Since then, the credit has been revised and extended several times. Here are the factors that will determine your eligibility for the credit:

  • When you signed the contact to buy your home. To claim the credit on your 2010 tax return, you must have signed a contract to purchase your primary residence before May 1, 2010.
  • When you closed. Home buyers who closed as late as Sept 30, 2010 qualify for the credit.
  • Where you lived before you bought the home. For homes purchased Nov 7, 2009 to April 30, 2010 here are two tax credits: a first time home buyer credit and a repeat home buyer credit. The first time home buyer is a max credit of $8,000 while the repeat home buyer credit has a $6,500 maximum credit.
  • How much you paid for the home. Both credits are limited to homes purchased for less than $800,000.
  • Your income. The full credit is available to taxpayers with a modified adjusted gross income of up to $125,000, or $225,000 for joint filers.

Now comes the bad news for taxpayers who claimed the home buyer’s credit in 2008. Starting  this year, they’ll have to pay it back. Tax credits claimed for home purchased in 2009 and 2010 don’t have to be repaid, as long as the home remains your primary residence for three years. The IRS is requiring taxpayers who claim the home buyer’s tax break to provide documents proving that they purchased a home within the required time frame. To meet that requirement, you must file your tax return by mail.

I’ve always said the IRS gives taxpayers great credits…you just need to know about them and understand them. BUT that is why Gunwel Tax & Bookkeeping is here. We know about these credits and various other write-offs and want to help you prepare your taxes. Give us a call at 212-979-6830 or stop by for a visit. GAI (www.gunwel.com) wants to be your  source for all of your financial needs. See you soon!

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