| Buying your first home is a big, life changing decision | | | | Technically, you have until June 30th, 2010 to complete |
| regardless of the economic climate. The decision | | | | the sale but a binding agreement must be entered into |
| becomes even more bold in an a recession where job | | | | by April 30th, 2010. Thirdly, you must fall within certain |
| cuts are rampant and the housing market has been in | | | | income limits. Single tax payers must not make more |
| a slump for over a year. Nevertheless, if you are | | | | than $125,000 annually if the sale occurs after |
| confident in your financial future, this is actually the best | | | | November 6th, 2009 and not more than $75,000 if the |
| time to buy a house thanks to the federal | | | | sale occurred between January 1st, 2009 and |
| government's first time home buyer stimulus package. | | | | November 6th, 2009. Married couples filing jointly must |
| The stimulus package awards first time home buyers | | | | not make more than $225,000 annually if the sale |
| with a tax credit of up to 10% of the purchase price of | | | | occurs after November 6th, 2009 and not more than |
| their home with a ceiling of $8,000. In layman's terms, | | | | $150,000 if the sale occurred between January 1st, |
| this is a grant which does not need to be repaid unless | | | | 2009 and November 6th, 2009. The income limits were |
| you sell the home within the first three years. More | | | | also raised as part of recent changes. There are other |
| specifically, this is a dollar by dollar reduction in taxes | | | | caveats in the legislation but these are the main |
| owed or an increase in your tax refund. It is also | | | | requirements. |
| referred to as "refundable" tax credit because you | | | | If you feel that you qualify for this tax credit, you are |
| can claim it regardless of your federal income tax | | | | likely wondering how you will claim it. You do so on |
| liability. | | | | your federal income tax return. You must first |
| For those who are unfamiliar with this program, here is | | | | complete IRS Form 5405 to determine the amount of |
| a quick summary of the key requirements. Firstly, you | | | | your tax credit. You then enter that amount on line 67 |
| must be a first time home buyer as required by the | | | | of the 1040 form on your 2009 tax return or line 69 on |
| current legislation. You meet this definition if you have | | | | your 2008 tax return. No other applications or special |
| not purchased a home as your principal residence in | | | | forms are required. It is as simple as that. |
| the three prior to your current purchase. If you are | | | | If you are serious about buying your first home by April |
| married, this applies to both you and your spouse. In | | | | 30, 2010, the best advice anyone can give you is to |
| other words, If either of you do not meet the definition | | | | plan ahead and plan accordingly, get in touch with |
| of a first time home buyer, neither of you qualify for | | | | mortgage brokers, file your taxes on time, and make |
| the tax credit. A primary residence does not include | | | | the provisions of the first time home buyer stimulus |
| vacation homes and the specific type of home (e.g. | | | | package work for you. Most importantly, do all your |
| townhouse, condominium, mobile home, etc) does not | | | | due diligence and do not procrastinate! The law may |
| matter. Secondly, the purchase must take place | | | | change from time to time so make sure you stay |
| between January 1st, 2009 and April 30th, 2010. The | | | | current on all the latest developments. If you do all that, |
| deadline was extended recently which gives you a | | | | you'll be well on your way to owning the home of your |
| few more months to close on your purchase. (The | | | | dreams. |
| previous deadline was December 1st, 2009). | | | | |