March 29, 2010 Leave a comment
By John Biondolillo, Chairman BCK Real Estate & President of Stowe Realty
As the April 15 deadline to file your Vermont state and US tax returns approaches, we thought it would be good to provide some insights and answer common questions that buyers have about the Home Buyers Tax credit.
Some FAQ’s, include:
1. How does a home buyer claim the tax credit?
The credit is claimed when the home prurchaser files or amends their federal income tax return. You must complete and file IRS Form 5405 and attach a copy of the HUD settlement statement. For mobile homes or new construction a copy of the retail sales contact is sufficient.
Do I need to sell my current residence in order to qualify for the $6,500 federal repeat home buyer tax credit?
No. In fact, you can continue to own both homes, and rent or use their former home for something else, as long as 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, or they will have to repay the federal tax credit plus interest and penalties.
3. Do married couples both have to meet the eligibility requirements in order to claim the credit, even if they file taxes separately?
Yes. We see this situation frequently. Both spouses must fully meet all the eligibility requirements irrespective of if they file jointly or separately. However, if an unmarried couple purchases a home and only one person qualifies, the eligible person may claim the full credit.
4. Do all home purchases need to be completed by April 30, 2010, in order to be eligible for the credit?
There are 2 exceptions to the April 30th deadline. If the purchaser enters into a binding contract on or before the deadline, they have until June 30th, 2010, to complete the purchase. However, the 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 January 1, 2009, and April 30, 2010 the deadline has been extended until April 30, 2011.
These are our understanding of the rules, but please consult with your tax advisor before you enter into a contract to purchase a home to make sure that you qualify.