THE PROCESS & THE BASICS

purchasers. Any home purchased for $80,000 or more qualifies for the full $8,000 amount. If the house

costs less than $80,000, the credit is 10% of the cost. It is available for the purchase of a principal residence

on or after Jan. 1, 2009, and before Dec. 1, 2009.

three years previous to the day of the 2009 purchase.

tax return. A qualified purchaser figures out their total tax owed and then the tax credits are applied to

reduce the total tax bill, i.e. if a person has a total tax liability of $9,500, an $8,000 credit would wipe out all

but $1,500 of the tax due.

for $2,000. The refundable amount is the difference between the $8,000 credit amount and the amount of

tax liability, determined by tables the IRS prepares each year.

tax return. Individuals filing as Single (or Head of Household) are eligible for the credit if their income is no

more than $75,000. Married couples who file a joint return may have income of no more than $150,000.

married filing jointly. The closer a buyer comes to the maximum phase-out amount, the smaller the credit

will be. The law provides a formula to gradually withdraw the credit.

townhouses or any similar type of new or existing dwelling.

on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at www.irs.gov.

found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the

purchase and settlement phase of the transaction. However, Florida recently adopted a $30.1 million budget

for its Florida Homebuyer Opportunity Program, which will help with downpayment assistance for those

who qualify for the federal $8,000 first-time homebuyer tax credit.

events have occurred that transfer the title from the seller to the new purchaser. Closings must occur before

Dec. 1, 2009 for purchases to be eligible.

as if it had occurred on Dec. 31, 2008. Thus, they can claim the credit on their 2008 tax return that was due on

April 15, 2009. Filing options include:

1. If you received an extension on your 2008 income tax return, you can still claim the credit as late

as Oct. 15, 2009.

2. If you have already filed your 2008 return before the purchase of a home, file an amended 2008 tax

return on Form 1040X. (Available at www.irs.gov).

3. If you plan to claim the credit on your 2009 tax return, you can modify your income tax withholding

(through employers) or adjust your quarterly estimated tax payments. Individuals subject to income tax

withholding would get an IRS Form W-4 from their employer. In many cases their withholding would

decrease and their take-home pay would increase. Those who make estimated tax payments would make

similar adjustments.

to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply.