It's not too late to take the First-Time Homebuyer's Credit

Taxpayers can still take advantage of the first-time homebuyer credit if an eligible buyer purchased a home as their primary resident in 2008, 2009, or 2010. Eligibility depends on the date of purchase. Those rules are listed below.

The IRS has been notifying taxpayers via mail who claimed the first-time homebuyer credit of repayment requirements. For example, those who purchased their homes between April 9, 2008 and Dec. 31, 2008 are required to repay the credit starting in 2010 by completing Part IV of Form 5405. If the home was purchased in 2009 or 2010, the letter from the IRS reminds the taxpayer that the credit must be repaid if the home is sold within three years or is no longer the main home.

First-time home buyer is defined:

• Bought your main home in the US – can be a house, houseboat, condo, or mobile home
• You (and your spouse if married) did not own any other main home during the 3-year period ending on date of purchase

To take the credit, complete Form 5405 and include the credit on line 67 of the Form 1040.

Nov. 7, 2009 to April 30, 2010 (H.R. 3548 + legislation enacted in July 2010)

• The tax credit DOES NOT have to be repaid to the government providing the purchaser "live in the home" and not sell it for a minimum of 36 months
• The tax credit is equal to 10 percent of the home's purchase price (maximum of $8,000, $4,000 for married filing separate status). Credit can be claimed on the 2009 or 2010 return.
• A copy of the properly executed settlement statement (often a Form HUD-1) must be attached to the return. Therefore these returns cannot be electronically filed.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit. No credit is available if modified AGI is more than $145,000 ($245,000 for married filing jointly).
• Taxpayers who have lived in their home for five consecutive years during the eight years before closing on a new home may qualify for a reduced credit of $6,500 or $3,250 for married taxpayers filing separately. The IRS recommends attaching with the paper tax return:
• copies of Form 1098 detailing Mortgage Interest paid,
• property tax records,
• homeowner's insurance records.
• must purchase or be locked into a contract to close before midnight on April 30, 2010 and must have closed on the home on or before Sept. 30, 2010 (legislation passed in July 2010 extended the June 30 deadline previously in effect).
• Military personnel, deployed overseas for a minimum of 90 days in 2009, would have until April 30, 2011 to claim the tax credit
• No credit is available if
• home purchase price exceeds $800,000
• if the home is purchased from a person related to the taxpayer (or taxpayer's spouse).
• the taxpayer is a dependent on another person's return
• the purchaser is under 18 years old (both spouses under 18 years old for a married couple)

Jan. 1, 2009 to Nov. 6, 2009 (American Recovery and Reinvestment Act of 2009):

• The tax credit DOES NOT have to be repaid to the government providing the purchaser "live in the home" and not sell it for a minimum of 36 months
• The tax credit is equal to 10 percent of the home's purchase price (maximum of $8,000, $4,000 for married filing separate status). Credit can be claimed on the 2008 or 2009 return
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. No credit is available if modified AGI is more than $95,000 ($170,000 for married filing jointly).

April 9, 2008 to Dec. 31, 2008 (Housing and Economic Recovery Act of 2008):

• The tax credit DOES have to be repaid over a 15-year period in 15 equal installments starting the 2nd year after you claimed the credit (2010). If your home ceases to be your main home before the 15-year period is up, you must include the remainder of your credit as additional tax on your tax return for that year
• The tax credit is equal to 10 percent of the home's purchase price (maximum of $7,500, $3,750 for married filing separate status)
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. No credit is available if modified AGI is more than $95,000 ($170,000 for married filing jointly).