| Tax Credit - Basics |
 
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This is your chance of a lifetime, don’t miss it! Congress has extended and expanded the homebuyer tax credit. There has never been a better time to buy a house with a huge selection of homes for sale in Wisconsin, record low interest rates, and now up to a $6,500 tax credit for current homeowners and $8,000 tax credit for first-time homebuyers.
Here is how the credits work:
Current Homeowner Tax Credit
If you’re in the market for a new home, Congress is giving you an added incentive to start looking. If you qualify and have a written binding contract to purchase home after November 7, 2009 and on or before April 30, 2010, you could receive up to the full $6,500 tax credit that you won’t have to repay.
There are some restrictions, so please read the information below, plus the questions and answers, to make sure you qualify.
The tax credit is a true credit. It does not have to be repaid.
The only repayment requirement is if the homeowner sells the home within three years after the purchase.
Homebuyers who file as single or head-of-household taxpayers can claim the full $6,500 credit if their modified adjusted gross income (MAGI) is less than $125,000.
For married couples filing a joint return, the income limit doubles to $225,000.
Single or head-of-household taxpayers who earn between $125,000 and $145,000 are eligible to receive a partial first-time homebuyer tax credit. Married couples who earn between $225,000 and $250,000 are eligible to receive a partial first-time homebuyer tax credit. The credit is not available for a single taxpayer who’s MAGI is greater than $145,000 and married couples with a MAGI that exceeds $250,000.
To qualify, the cost of the purchased home is limited to $800,000.
To qualify, you must have a written binding contract to purchase in effect after November 7, 2009 and on or before April 30, 2010. You will then have until June 30, 2010 to close on the house.
A refundable credit means that if you pay less than $6,500 in federal income taxes, then the government will write you a check for the difference.
For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $1,500 payment from the government.
If you are due to receive a $1,000 tax refund from the government, your refund would grow to $7,500 ($1,000 plus $6,500 from the homebuyer tax credit).
Buyers can take the tax credit on their 2009 or 2010 income tax return.
All homes, whether single-family, townhomes or condominium apartments, will qualify, provided that the home will be used as a principal residence and the buyer has owned the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years. This also includes newly-constructed homes.
In order to claim the credit purchaser must attach documentation of the home purchase to their tax return.
First-Time Homebuyer Tax Credit
If you’re in a market for your first home, or if you are looking to buy again after not owning for three years, Congress is giving you an added incentive to become a homeowner. If you qualify and purchase a home after November 7, 2009 and on or before April 30, 2010, you could receive up to the full $8,000 tax credit that you won’t have to repay. Any home purchased for $80,000 or more qualifies for the full $8,000 amount. If the house costs less than $80,000, the credit will be 10% of the cost.
There are some restrictions, so please read the information below, plus the questions and answers, to make sure you qualify.
The tax credit is a true credit. It does not have to be repaid.
The only repayment requirement is if the homeowner sells the home within three years after the purchase.
Homebuyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $125,000.
For married couples filing a joint return, the income limit doubles to $225,000.
Single or head-of-household taxpayers who earn between $125,000 and $145,000 are eligible to receive a partial first-time homebuyer tax credit. Married couples who earn between $225,000 and $250,000 are eligible to receive a partial first-time homebuyer tax credit. The credit is not available for a single taxpayer who's MAGI is greater than $145,000 and married couples with a MAGI that exceeds $250,000.
The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.
To qualify, the cost of the purchased home is limited to $800,000.
A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.
For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.
If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
Buyers can take the tax credit on their 2009 or 2010 income tax return.
All homes, whether single-family, townhomes or condominium apartments, will qualify, provided that the home will be used as a principal residence and the buyer has not owned a principal residence in the prior three years. This also includes newly-constructed homes.
In order to claim the credit purchaser must attach documentation of the home purchase to their tax return.
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