2009-2010 Home Buyer Federal Tax Credit Fact Sheet
Who is Eligible
- First-time home buyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
- Existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
- All U.S. citizens who file taxes are eligible to participate in the program.
- Home buyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
- For married couples filing a joint return, the combined income limit is $225,000.
- Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
- The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.
- The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.
Types of Homes that Qualify
- All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.
Tax Credit is Refundable
- A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
- For example:
- A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time home buyer tax credit).
- A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
- All qualified home buyers can take the tax credit on their 2009 or 2010 income tax return.
Georgia's Homebuyer Tax Credit:
House Bill 261, signed into law by Governor Perdue on May 11, 2009, authorizes a limited state income tax credit for the purchase of an eligible single-family residence.
Who is eligible to receive the tax credit?
Unlike the federal tax credit, Georgia’s Homebuyer Tax Credit is not limited to first-time homebuyers. Instead, anyone who purchases an “eligible single-family residence” during the effective period is entitled to claim the credit against the taxpayer’s state income tax liability (subject to the limitations described below).
How is the amount of the tax credit determined?
The amount of the credit is the lesser of 1.2 percent of the purchase price of an “eligible single-family residence” or $1,800.00.
Is there a limit as to how much I can claim in one year?
Yes. The amount of the state tax credit which may be claimed in a single tax year cannot exceed the taxpayer's income tax liability for that year or one-third of the total amount of the credit allowed, whichever is less. This means a maximum of $600 may be claimed each year. Any excess or unused tax credit amount may be carried forward to apply to the taxpayer's succeeding years' tax liability.
If I qualify for the tax credit, can I apply it against my 2008 taxes?
No. The tax credit does not apply against prior years' tax liability.
Are there income limits?
What types of homes qualify for the tax credit?
Only “eligible single-family residences”, as defined by House Bill 261, qualify for the tax credit.
What is an eligible single-family residence?(1) A single-family structure, including a condominium unit that is occupied for residential purposes by a single family, that is (A) a new residence, a residence occupied at the time of sale, or a previously occupied residence and (B) that was for sale prior to May 11, 2009 and is still for sale after May 11, 2009; or(2) A single-family structure, including a condominium unit, that is occupied for residential purposes by a single family, that is: (A) A residence with respect to which a foreclosure event has taken place and which is owned by the mortgagor or the mortgagor's agent. (B) An owner occupied residence with respect to which the owner's acquisition indebtedness was in default on or before March 1, 2009. Acquisition indebtedness is debt incurred in acquiring, constructing, or substantially improving a qualified residence and which is secured by such residence. Refinanced debt is acquisition debt if at least a portion of such debt refinances the principal amount of existing acquisition indebtedness .
Source: Georgia Department of Revenue Informational Bulletin CRED-2009-05-19
What are the effective dates of the tax credit?
House Bill 261 states that it will become “effective” upon approval by the governor. This occurred on May 11, 2009. However, a separate provision in the legislation provides that the tax credit will apply to purchases made during a six month period commencing on the first day of the month following the effective date and ending on the last day of the sixth month thereafter. Accordingly, it appears that a credit will be allowed against a taxpayer’s state income tax liability for the purchase of one “eligible single-family residence” made during the six-month period commencing on June 1, 2009 and ending on November 30, 2009.
What information do I need to maintain or prepare to be eligible for the tax credit?
To claim the tax credit, a taxpayer who purchases one eligible single-family residence between June 1, 2009 and November 30, 2009 must complete the eligible single-family residence tax credit portion of the 2009 Form IND-CR and include this form when they file their 2009 Form 500. The 2009 IND-CR will be posted to the Georgia Department of Revenue's website in late 2009. The taxpayer must also include with their 2009 Form 500 the following documentation of the eligibility of the single-family residence:
1. A bona fide listing agreement with a real estate agent or broker licensed in this state, or documentation that the eligible single-family residence was for sale directly by the owner without a real estate agent or broker, or other appropriate documentation to validate the eligibility of the single-family residence.
2. A copy of the closing statement.
3. If the residence qualifies because the owner’s acquisition indebtedness was in default on or before March 1, 2009, or because it was a residence with respect to which a foreclosure event has taken place, the taxpayer must supply documentation to show that this was the case.
Source: Georgia Department of Revenue Informational Bulletin CRED-2009-05-19
What if I file an electronic tax return?
The legislation provides that in the event the taxpayer files an electronic return, the documentation shall only be required to be electronically attached to the return if the Internal Revenue Service allows these types of attachments when the data is transmitted to the department. In the event the taxpayer files an electronic return and the documentation is not attached because the Internal Revenue Service does not, at the time of the electronic filing, allow electronic attachments to the Georgia return, the documentation must be maintained by the taxpayer and made available upon request of the commissioner of the department of revenue.
Final Note: HBAG is providing the information on this web site for general guidance only. The information on this site does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question. None of the tax information on this web site is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.