The recent $8000 tax credit, which has infused more energy into the real estate market, has come as a boon to many of the first-time home buyers, who have been longing to own that dream home of theirs. For example, if you wish to invest in some Asheville real estate property then the $8000 credit line can make things easier for you.
But, before availing of the credit, you should understand the nitty gritties of the plan. If you fulfill the criteria to be termed a first-time home buyer, the next important aspect you should pay serious attention to is the detailed procedure of claiming it.
When To Claim?
If you are a first-time real estate buyer who has purchased a home after January 1, 2009, or would purchase a home before December 1, you can claim it either on your 2008 tax returns or on your 2009 tax returns.
If you want to claim it on your 2008 tax returns, but have already submitted the returns to the IRS, you can file an amended version, claiming it and get the money back quickly. If you are qualified for the tax credit and want to buy a home this year, you can reduce your income tax withholding.
IRS Publication 919 contains rules and guidelines for income tax withholding. After reducing the income tax withholding if the home is not bought, you are liable to repay the income tax, interest, and possible penalties to the IRS (Internal Revenue Service).
Use Form 5045:
Claiming it is an easy procedure for you. For this purpose, you should fill in the revised version of Form 5405, posted on IRS.gov, to find out the tax credit. Then, you can claim the amount on Line 69 of the 1040 income tax return. The Form 5405 will be electronically processed to claim the $8,000 credit for homes bought in 2009. There is no need of any other applications or forms. For a future purchase, you won’t be able to claim the credit on Form 5405.
Income Limits:
There are income limits to claim the tax credit. For single tax payers, it is $75,000 and for married taxpayers filing a joint return, it is $150,000. The credit amount is reduced for single taxpayers with a modified adjusted gross income (MAGI) of more than $75,000 and for married tax payers with a MAGI of $150,000. The amount is zero if you have a MAGI of more than $95,000 (single) or $170,000 (married).
Tax Liability And The Credit:
You can claim it even if you have little or no federal income tax liability to compensate for. The government will send you a check for a portion or even the entire amount of the refundable credit.
If your tax liability is less than the $8,000 credit, you will get a check amounting to the difference. The credit is a dollar-for-dollar reduction in what you owe to the IRS. For example, if you owe $8,000 in income taxes and receive an $8,000 tax credit, ultimately you would owe nothing to the IRS.
Claim For Your Own Home Also:
Instead of buying from a contractor, if you have constructed your own home on the beautiful piece of Asheville real estate you own, you can claim it. For that, your house is considered as having been bought on the date you first started residing in the house. But, the date must be on January 1, 2009 or between January 1 and December 1, 2009. If you have bought a new home from a builder, the settlement date determines the eligibility for it.
If you are first-time home buyer longing for your dream home, Asheville real estate can help you out. Look forward to an atmosphere of cooperation and respect that carries through every transaction. To know more, visit http://www.preferredrealestatecenter.com
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