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Homebuyers’ top questions about the tax credit

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The Florida Open House Weekend, April 10-11, is the last, best opportunity to secure up to $8,000 in tax credits for first-time homebuyers (up to $6,500 for move-up buyers).

According to the National Association of Home Builders, the following are top questions asked by prospective homebuyers. In all cases, buyers should check with the IRS or a qualified financial advisor for specific personal advice.

How does a homebuyer claim the tax credit?

The credit is claimed when the homebuyer files or amends his or her federal income taxes. For qualifying homes purchased in 2009 or 2010, the taxpayer must complete IRS Form 5405 and attach a copy of the settlement statement. In most cases, the settlement statement is a properly executed Form HUD-1.

In circumstances where a HUD-1 is not provided, such as purchasing a mobile home or a newly constructed home, the IRS will accept an executed retail sales contract (mobile homes) or a copy of the certificate of occupancy (new homes).

Does the homebuyer have to sell their current home in order to qualify for the $6,500 repeat homebuyer tax credit?

No – a homebuyer does not need to sell their current home in order to be eligible for the repeat buyer credit. They can continue to own both homes and rent or use the former home for something else providing it no longer serves as their principal residence. The taxpayer is required to use the new home as their principal residence and live in it for at least 36 months; otherwise, they must repay the credit.

Do married couples both have to meet the eligibility requirements in order to claim the credit – even if they file taxes separately?

Both spouses must fully meet all the eligibility requirements for either the $8,000 first-time homebuyer tax credit or the $6,500 repeat buyer tax credit, regardless of whether they file joint or separate tax returns. However, if an unmarried couple purchases a home and only one person qualifies, the eligible person may claim the full credit.

Do all home purchases need to be completed by April 30, 2010, in order to be eligible for the credit?

There are two exceptions to the April 30 deadline. If the buyer enters into a binding contract by the deadline, they have until June 30, 2010, to complete the purchase. The deadline has been extended a year, to April 30, 2011, for members of the uniformed services, Foreign Service or employees of the intelligence community who have been on qualified extended duty outside the United States for at least 90 days between Jan. 1, 2009, and April 30, 2010.

For more information on the tax credit and the Florida Open House Weekend, visit Florida Realtors website at: http://www.floridarealtors.org/AboutFar/OpenHouse/index.cfm

© 2010 Florida Realtors®

For information about the Sarasota Real Estate Market, visit PremiumPropertiesSarasota

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