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Quick Home Buyers Checklist

  • Decide to Buy and Get Pre-Approved
  • Decide on Requirements
  • Choose Your Real Estate Agent (Hint, Hint, Carvajal Group!)
  • Select Mortgage Lender and Secure Financing
  • Search for Properties at CarvajalGroup.com
  • Narrow Down Your List
  • Schedule Showings
  • Find Your Ideal Home
  • Review Seller's Disclosure, Survey and Other Paperwork
  • Submit Offer with Option Money and Earnest Money Checks
  • Schedule and Review Inspection
  • Arrange for Homeowner's Insurance
  • Review Settlement Statement
  • Recheck Financing
  • Attend the Closing with Certified Funds and Driver's License(s)
  • Get Keys
  • Hire Handyman/Complete Remodeling
  • Change the Locks
  • Schedule Movers
  • Unpack Boxes
  • Enjoy Your New Home!
Neighborhood Guide

Home Buyer Tax Credit Overview

Congress recently extended the $8,000 First-Time Home Buyer Tax Credit and the $6,500 current homeowner tax credit through April 30, 2010. The credit reduces the taxpayer's tax bill or increases the refund dollar for dollar. Unlike most tax credits, the first-time homebuyer credit is fully refundable. This means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

Who Qualifies for the Extended Credit?

  • First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010. To qualify as a "first-time home buyer" the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
  • Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to any of the following primary residences purchased for $800,000 or less: single-family homes, condos, townhomes or co-ops. Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible.

Are There Any Income Restrictions?

The credit is 10 percent of the purchase price of the home, with a maximum allowable credit for first-time home buyers of $8,000 and a maximum allowable credit for current homeowners of $6,500.

  • Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 will receive the maximum tax credit for residences with a purchase price of $80,000 or more.
  • Single buyers who earn between $125,000 and $145,000 and married couples with incomes between $225,000 and $245,000 are eligible for a partial credit. The amount of the tax credit decreases as his/her income approaches the maximum limit.
  • Home buyers earning more than the maximum qualifying income -over $145,000 for singles and over $245,000 for couples - are not eligible for the credit.

What Steps Must Be Completed by April 30, 2010?

Under the Extended Home Buyer Tax Credit, a written binding contract to purchase must be in effect on April 30, 2010. The purchaser will have until July 1, 2010 to close.

Are There Any Other Restrictions?

  • The credit must be repaid if, within three years of purchase, the home ceases to be the taxpayer's main home.
  • The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
  • The credit is not eligible for homes purchased from a close relative. This includes a home purchased from the taxpayer's spouse, parent, grandparent, child or grandchild.
  • The credit is not eligible for dependents.
  • The credit is not eligible for nonresident aliens.

Are There Special Benefits for Members of the Military and Federal Employees?

  • Members of the uniformed services, members of the Foreign Service and employees of the intelligence community serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.
  • In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community.

How Do I Claim the Tax Credit?

The credit is claimed using the Federal Tax Form 5405, which you file with your original or amended tax return. Purchasers must attach a properly executed settlement statement to their return.

If you have specific questions or need additional information about qualifying for the tax credit, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

Does the first-time home buyer tax credit still qualify when there is a co-signer or co-purchaser?

When a homeowning parent of an adult child co-signs for a mortgage, and both names appear on the note, the child will receive the full $8,000 tax credit if he/she hasn’t owned a home during the three years preceding the current purchase and can qualify based on income.

When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.