IRS 2010 First Time Home Buying Tax Credit Tips and Guidelines

Given that the First Time Home Buyer Tax Credit has been extended into 2010, and maybe indefinitely, many people are buying homes for the first time. Additional information the on the first time home buyer tax credit extension.
With so many new home buyers in the US, there are many people in a new tax position for the first time in their lives. As a result, to keep them out of trouble and to provide guidance about the new tax credit guidelines – the US IRS has published information that they want everyone to know who may be considering the tax credit.

Home Buying Tax Credit Guidelines by IRS

Here are the top 10 things the IRS wants you to know about the expanded credit and the qualifications you must meet in order to qualify for it.

You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.

If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.

For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.

You can qualify for a reduced home buying credit – $6,500 – if you have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.

The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.

Contrary to earlier versions of this home buying tax credit, if you have a higher income you may now qualify for the credit. The new law applies for homes purchased after November 6, 2009. The full credit is available to you as a taxpayer if you have a modified adjusted gross income up to $125,000 as a single filer, or $225,000 for joint filers.

The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.

No credit is available if the purchase price of the home exceeds $800,000.

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.

A dependent is not eligible to claim the credit.