Time Running Out on Homebuyer Tax Credit - Use a Mortgage Calculator to Figure Your Savings

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Go Home! Take Advantage of the Tax Credit Before it Expires

By now, most of you have heard about the federal $8,000 tax credit for new home buyers.  Using the tax credit is not the only way to save money. Shopping for a loan may save you as much or more than the tax credit. If you are considering purchasing a home this year, complete our form to have up to four lenders compete for your business.

Do it now, as your mortgage must close by November 30, 2009 to take advantage of the first time buyer tax credit.  If you're considering buying a home, don't let this opportunity slip by. Here's how the tax credit works:

Who: For the purposes of gaining the tax credit, the IRS defines first time buyers as those who have not owned a home within 36 months preceding the purchase of a qualifying home. There are others who may also be eligible, such as "displaced homemakers" and those who live in mobile homes not considered "real property."

Qualifying income: Married couples filing jointly may not have a modified adjusted gross income (MAGI) above $150,000. There is a sliding scale that determines the amounts available between the maximum benefit and the absolute cutoff.Other tax payers may not have a MAGI of more than $75,000.

How much:  The tax credit amount for homes purchased in 2009 is 10% of the purchase price up to $8000 for single home buyers, and married couples filing their tax returns jointly. Married people filing separately can receive one half of the maximum credit.

Eligibility and deadlines: Owner-occupied homes priced $80,000 and above are eligible for the maximum tax credit for homes purchased by December 1, 2009. For newly-built homes, your purchase date is considered to be the date you move in.

No repayment for owner occupants: If you occupy the home you buy for 36 months, you don't have to repay any part of the tax credit amount. If you cease to occupy the home you buy in less than 36 months from the purchase date, you'll have to repay the tax credit to the IRS.

Getting the tax credit: You apply for the tax credit by filing IRS form 5405.These are general highlights of the tax credit program. Please consult your tax advisor for details pertaining to your circumstances.

Shop Mortgage Rates Using Online Mortgage Calculator

Make the most of the first-time home buyer tax credit by shopping mortgage rates and using online mortgage calculator tools for comparing mortgage loan options and mortgage rates. The combination of lower rates, the tax credit, and affordable home prices in many areas is providing first time buyers with added opportunities for home ownership.

Other Conditions

Besides looking at your income, to qualify you must not:

Have owned a home in the last three years

Be a non-resident alien

Acquire your home by gift or inheritance

Acquire your home from a related person

Acquire your home from a corporation or partnership in which you have greater than a 50 percent capital interest

You Bought Your Home: Now Claim your Benefit

You can exercise this tax credit by filing an amended 2008 tax return or by claiming it on your 2009 return. In either case, you will need IRS form 5405. Even if you owe no tax for either year, be sure to file your tax claim as it will be returned to you as a payment.

Use a Mortgage Loan Calculator to Determine where to Apply Funds

Use a mortgage calculator to determine whether a bigger down, discount points or closing costs delivers the biggest benefit. Run through all scenarios for each mortgage offer to get the best deal.

How to Keep your 2009 First Time Home Buyer Tax Credit

You must occupy your home for three years from purchase: otherwise you must repay your credit. There are some exceptions to this rule including sale of the property to someone to whom you are not related, property division caused by divorce or death, and vacancy caused by condemnation or destruction of the home. See details about these exceptions on IRS form 5405.

Lorraine Watkins
Lorraine Watkins is a regular contributor to business and education websites. She is a notary in California specializing in loan documents. She holds an MA in English from California State University, East Bay.