Look for rush to get home buyer credit
More than a million people have been able to benefit so far from first-time home buyer credits, according to numbers released Tuesday by the Internal Revenue Service. The rush is likely to hit full throttle in the next few weeks, though, as taxpayers try to close their purchases on a first home by Nov. 30 to qualify for the credit.
This year, a credit of up to $8,000 remains on the table for home buyers of modest means who have never owned a home or have not owned one in the past three years.
"The IRS wants to make sure that people are aware the clock is ticking for first-time home buyers to take advantage of this credit," said Luis D. Garcia, an IRS spokesman in Detroit.
* Don't plan to buy that house and rent it out next year -- you would owe the money to the IRS.
* Don't plan to buy your mother's home or a home from a close relative -- the credit won't be allowed.
* Do not fall for a slew of schemes out there designed to pick up an easy few thousand bucks -- including trying to amend your 2008 return and claiming the credit when you did not buy a home or you're not a first-time home buyer. The IRS is using computer-screening tools to identify questionable claims.
The IRS reported earlier that the American Recovery and Reinvestment Act, which extended the tax credit, has provided a tax benefit to more than 1.4 million taxpayers nationwide so far. That includes both a smaller credit in 2008 and the more generous credit in 2009.
The IRS has some data on 2009 results because taxpayers are able to amend their 2008 returns to receive the credit sooner if they've bought their first home this year. The credit for purchases that meet the Nov. 30 deadline also could be claimed on a 2009 return filed next year.
How the credit works:
The credit is complex. You're going to need to buy a home worth at least $80,000 to get an $8,000 credit.
The credit is 10 percent of the purchase price with a maximum of $8,000.
Unlike most tax credits, the first-time home buyer credit is fully refundable -- meaning you would get the money for the credit even if you owe no tax or the credit is more than the tax owed. (Hence the temptation for scammers.)
Income limits do apply.
For a married couple filing a joint return, the phase-out range starts with modified adjusted gross income of $150,000 and goes to $170,000. So if the modified adjusted gross income is $170,000 or higher, no first-time credit is allowed.
For other taxpayers, the range is $75,000 to $95,000.
This deal will not work if the taxpayer owned another main home at any time during the three years prior to the purchase. For a married couple filing a joint return, this applies to both spouses.