If you spent this past rainy weekend visiting open houses looking for a new home, you might want to step up the search. The reason is that we are fast approaching the deadline for the expiration of the Home Buyers Tax Credit. In order to qualify for the credit, you must have a signed purchase and sale contract in place by April 30. That gives you about 6 weeks to find a possible property. (In addition, the sale must close by June 30th.) This credit has been extended before but it doesn't appear likely that it will be extended again.
The credit is equal to 10 percent of the purchase price of the home and first time home buyers (those who have not owned a home in the past three years) can qualify for up to an $8,000 credit. People who already own homes (and have lived in them for 5 out of the past 8 years) can get a credit of up to $6,500 if they purchase a replacement home.
The full credit is available to single filers with Modified Adjusted Gross Income (MAGI) up to $125,000 and $225,000 for joint filers. Partial credits are available for single filers earning between $125,000 and $145,000 and married filers earning between $225,000 and $245,000. Single filers earning more than $145,000 and married filers earning more than $245,000 are not eligible for the credit.
Finally, if you make a qualifying purchase in 2010, you have the option of claiming your credit on either your 2009 or your 2010 return. You will also need to file Form 5405 with your return and you wont be able to file your return electronically because you need to provide documents that prove you are eligible for the credit.
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