You've just closed (or will be closing soon) on the purchase of your new home. You've been told you're eligible* for the new $6500 fully-refundable federal
Move-Up Home-Buyer Tax Credit.
You've got just one question:
When do I get my money?
The short answer is: It's up to you!
But your available options will be determined by whether the closing date of your purchase is:
Between November 7 and December 31, 2009
Or after January 1, 2010.
And you will have to keep in mind the income limitations applicable to the calendar year option you pick.
For purchases closed between November 7 and December 31, 2009, your options are:
1) Elect to File as if the purchase was made in Tax Year 2008.
Here's How:
Wait for a new November 2009 revision of Federal Tax Form 5405.
File the new Federal Tax Form 5405 to compute and claim the credit.
Attach a copy of your HUD-1 settlement form (closing statement) to that new Form 5405 as proof of the completed home purchase.
File a Federal Form 1040X (Amended Return) to amend Line 69 of your previously filed 2008 Federal Tax Return.
The IRS says to allow 3-4 months for a response to an amended return. They regularly beat this turn-around last summer, but may take longer this winter.
2) File as if the purchase was made in Tax Year 2009.
Here's How:
After January 15, 2010:
File a 2009 Federal Form 5405 (not yet published) to claim the credit.
Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
File your regular 2009 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on Line 67.
Expect your refund on the usual timeline a few weeks after you file.
For purchases closed after January 1, 2010, your options are:
1) File as if the purchase was made in Tax Year 2009.
Here's How:
After January 15, 2010:
File a 2009 Federal Form 5405 (not yet published) to claim the credit.
Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
File your regular 2009 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on Line 67.
Expect your refund on the usual timeline a few weeks after you file.
If you purchase you home after filing your 2009 income tax return (but before the April 30 deadline to have your purchase under contract and the June 30 deadline by which the sale must close) you can elect to file a 1040X to amend 2009.
2) File as if the purchase was made in Tax Year 2010.
Here's How:
After January 15, 2011:
File a 2010 Federal Form 5405 (not yet published) to claim the credit.
Attach a copy of your HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
File your regular 2010 Federal Income Tax Form 1040 in the usual way, reporting the credit amount on the appropriate line.
Expect your refund on the usual timeline a few weeks after you file.
Here's how you may want to decide which of those options to choose:
If you choose to file the credit for 2008, the income limits (Modified Adjusted Gross Income - MAGI) associated with the First-Time Home-Buyer credit on December 31, 2008 will apply. Those were:
$ $75,000 for single filers
$ $125,000 for married filing jointly.
Also applicable for 2008 will be the pro-rating/phase out of the tax credit for those having incomes just above those stated limits ($95,000 and $145,000).
If you choose to file the credit for 2009 or 2010, the income limits (Modified Adjusted Gross Income - MAGI) associated with the credit on December 31, 2009 will apply. Those are:
$ 125,000 for single filers
$ 225,000 for married filing jointly.
Also applicable for 2009 and 2010 will be the pro-rating/phase out of the tax credit for those having incomes just above those stated limits. See you tax advisor for the details of this provision, but the bottom line is:
If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.
The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
I
*(i.e. I've lived in my old personal residence for five (5) out of the last eight (8) years.)
************
Jim Hale
Principal Broker
Graduate, REALTOR Institute e-PRO
actionagents.net
1715 Linnea Avenue
Eugene, OR 97401-1962
Office: 541-484-0219
Direct: 541-543-9991
Fax: 541-485-8068
www.actionagents.net jim@actionagents.net

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