First Time Home Buyer Tax Credit 2011

First Time Home Buyer Tax Credit 2011

Before we explain about the 2011 tax credit, it is worth to straighten out a simple fact many people confuse with, First Time Home Buyer Tax Credit is not the same as a tax deduction. Here is a short tax credit vs tax deduction. A tax credit is a full reduction in what the taxpayer owes. That implies a taxpayer whom owes $8,000 in income taxes and who fills the 5405 form and gets an $8,000 tax credit will owe nothing to the IRS. The tax deduction is certainly something different; it’s an amount that’s subtracted from your earnings which is taxed.

$8,000 First Time Home Buyer Tax Credit Extended Until 6/30/2010

President Obama authorized the First-time Homebuyer Tax Credit 2010 bill on November 2009 which extends the $8,000 First Time Home Buyer Credit until June 30th, 2010.

So in fact today may be the best ever moment for a first time home buyer to acquire a home. Property prices have reached the minimum, the bank mortgage rates are truly low too, some 0 down home loans are offered, 4% for current 30 year fixed mortgage rates which stand around 4% can be located, 620 minimum credit score loans continue to exists, and the government is offering $8,000 as an incentive. One year back would anyone dream of such housing market environment?

Don’t wait, get your 2011 tax credit done.. 

What you need to know to fill your Form 5405 for the $8,000 First Time Home Buyer Tax Credit:

1. This First Time Home Buyer Tax Credit 2010 only refers to first time home buyers that have not owned a home in the last 3 years.

2. The First Time Home Buyer Tax Credit is offered to those who earn a maximum of $125,000 modified gross income or couples that earn a maximum of $225,000.

3. One criteria for the entire $8,000 credit is if you are a citizen, or a resident as defined by the IRS who buys a house for $80,000 or more. (Restricted up to a buying price of $800,000) The First Time Home Buyer Tax Credit is 10% of the 80,000$ purchasing cost.

4. A person should have a new house buying agreement signed by April 30th, 2010 and close by June 30th, 2010 to be legible. If you build a home, the date you first occupy your home is considered to be the purchase date.

5. For married couples if either one of them have owned a home as a principal residence in last 3 years then you are not eligible for the first-time home buyer tax credit. Yet, two home buyers who are not married could allocate the credit amount to any buyer who qualifies as a first-time buyer tax credit, such as might happen if a parent mutually buys a house together with a son or daughter.

6. In order to get your First-time Homebuyer Tax Credit 2010, you can’t buy the home from any of your close relatives: parents, children or spouse.

How to do claim your 2010 tax credit

You claim the First-time Homebuyer Tax Credit on your 2009 tax return by filing the IRS 5405 Amendment Form.

First-time Homebuyer Tax Credit:
Form 5405 – First-Time Homebuyer Credit (PDF)
Form 5405 Instructions (PDF)
You can call the IRS at 1-800-829-3676 and asking them to mail Form 5405 to you, the payment will arrive from the IRS within two month.

If you are claiming the first time homebuyer tax credit on an original or amended 2009 tax return (or later), you may not file your tax return electronically.
You must attach a copy of your settlement statement or other proof of purchase according to the IRS and mail your tax return with Form 5405 to the IRS

* For the property tax deduction for homeowners who do not itemize, you enter the increased standard deduction on federal tax Form 1040 or Form 1040A. You do not file a special form. The instructions for Forms 1040 and 1040A include a Standard Deduction Worksheet so you can calculate your standard deduction with the property tax deduction included.

It is recommended for First-time Homebuyers to seek Tax Credit 2010 advice from your tax specialist regarding additional guidance upon this kind of issues.