Secrets of the homebuyer tax credit
- A buyer who earns no taxable income or doesn't owe any federal income tax can still qualify for the tax credit and can file a tax return just to claim it.
- The tax benefit is not a deduction, but rather a refundable credit. That means a homebuyer could receive a refund check from the federal government up to the full amount of the credit.
- An unmarried homebuyer or at least one spouse of a married couple must be at least 18 years old to qualify for the tax credit.
- Individuals who are claimed as a dependent on someone else's tax return cannot qualify for the homebuyer tax credit.
- Nonresident aliens, as defined by the IRS, cannot claim the tax credit.
- Housing agencies in some 19 states offer qualified homebuyers short-term second mortgages that can be used to "monetize" the tax credit and apply the money to a down payment or closing costs. The National Council of State Housing Agencies, or NCSHA, in Washington, D.C., has compiled a state-by-state list of these programs. These loans may charge little or no interest and can be repaid with a tax credit refund, according to the NCSHA.
- Buyers who move out of the home within 36 months must repay the tax credit in full on that year's federal income tax return. Certain U.S. military personnel, U.S. Foreign Service employees and federal employees in the intelligence community who move out of the home due to qualified official extended duty outside of the U.S. are exempt from this rule.
- Certain U.S. military personnel, U.S. Foreign Service employees and federal employees in the intelligence community get an extra year to buy a home. They must enter into a contract by April 30, 2011, and close by June 30, 2011, to qualify.
- Three Web sites that offer some useful information about the tax credit are the IRS Web site at IRS.gov, the National Association of Realtors Web site at Realtor.org and the National Association of Home Builders Web site at FederalHousingTaxCredit.com.
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