Washington Tax Update
June 16, 2010
It bears repeating
How to claim home buyer credit
If you purchased a home before May 1 and expect to qualify for the $8,000 first-time home buyer credit or the $6,500 credit for long-term homeowners, you must complete the closing by June 30. Note that some members of Congress have proposed extending the closing date to Sept. 30, however, the credit is available only for home purchases that were under contract on April 30.
The first-time home buyer credit is equal to the lesser of $8,000 ($4,000 for a married individual filing separately) or 10 percent of the purchase price of a principal residence. A long-term homeowner may claim a credit if the buyer (and the buyer's spouse, if married) maintained the same principal residence for any five consecutive year period during the eight-years ending on the date of purchase. The maximum credit is the lesser of $6,500 ($3,250 for a married individual filing separately), or 10 percent of the purchase price of the home.
The credits phase out over modified adjusted gross income levels of $125,000 to $145,000 for individuals and $225,000 to $245,000 for those filing a joint return. Also, the credits cannot be claimed for a home costing more than $800,000. Dependents cannot claim the credits, and a purchaser must be at least 18 years of age on the date of purchase.
To claim either credit, you must complete Form 5405, First Time Homebuyer Credit and Repayment of the Credit, and include with your tax return one of the following documents:
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A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
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For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.
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For a newly constructed home for which a settlement statement is not available, a copy of the certificate of occupancy showing the owner"s name, property address and date of the certificate.
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If the purchase date is after April 30, and before July 1, 2010, you should also attach a copy of the pages from the signed purchase contract showing all parties' names and signatures, the property address, the purchase price and the date of the contract.
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