Because of the recent recession that has hit the country’s economy; the housing industry experienced a drop in sales, causing property prices to drop as well. The government, realizing the importance of the housing industry in the country’s economy, implemented several laws that aim to boost property sales.
The Homebuyer Tax Credit law was initially passed in 2008 and then revised in 2009. With recent developments in the economy, the 2010 administration revised the law in which it provided new rules for purchasing the tax credit.
The new homebuyer tax credit passed in 2010 is much less stringent, allowing more taxpayers to qualify for the credit needed to purchase a new home. Below is a complete summary of what this law is about and what the requirements are to be eligible for the homebuyer tax credit.
The law applies to first-time buyers who have not owned a primary residence in the last three years and is subject to income limitations, depending on the person’s status. A single buyer must have an adjusted gross income between $125,000 and $145,000 to be eligible for the full credit. Married couples, however, need to earn between $225,000 and $245,000, since they are expected to earn more than a single person.
For homes worth more than $800,000, no tax credit will be granted under the newly revised law for 2010. The revised law also sets an age limit of 18 at the closing date.
Because the revised law only applies to home purchases made after November 6, 2009, the 2010 homebuyer tax credit requires proof of purchase with a properly executed settlement statement on your tax return or experience great inconvenience with government officials.
Due to changes made to the law, the rules for home purchase tax credits are quite complicated, although the revision allows for less stringent requirements. This needs to be thoroughly researched in order to be able to purchase your first home without any hassle. For further assistance and reliable reference, complete and detailed information on the subject can be found on the IRS website, irs.gov.
The government website also has frequently asked questions and instructions on how to apply for home purchase tax credits from the same website. The site has the summary of all the necessary requirements when applying for the credit.