The good news is First Time Home Buyer Tax Credit has been extended and broadened. First time home buyer credit will help many young couples (or singles) as well as those wanting to move up. The extension allows for tax credits up to $8,000.00 for all first-time buyers who purchase a home on or after January 1, 2010 AND on or before April 30, 2010; (closing date deadline is June 30th).
Qualifying income limits have also been broaden to $125,000.00 from $75,000.00 for those filing single tax returns; and to $225,000.00 from $150,000.00 to married couples filing a joint return. Clearly this opens this benefit to more perspective buyers. Tax credits of $6,500.00 for current home owners wishing to move up are also available, with some restrictions about how long you've owned your current home.
Two most commonly asked questions are probably-- what's the difference between a tax credit and a tax deduction, and if the credit is up to $8,000.00 how do I know how much my credit will be?
- A tax credit reduces the amount of tax you owe, while a tax reduction lowers the income base you pay tax on. It's important you understand this difference.
- The credit is 10% of the purchase price of the home, up to $8,000.00.
File IRS form 5405 with your Federal Tax Return to take advantage of this program, and happy house hunting.