Federal Home Buyer Tax Credit

Georgia Home Buyer Tax Credit

Who is eligible to receive the tax credit?

First time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit.  The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

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 certain limitations).

How is the amount of the tax credit determined?

The tax credit is equal to 10 percent of the home´s purchase price up to a maximum of $8,000.

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?

No.

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.

Are there any income limits for claiming the tax credit?

Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 for single taxpayers and $150,000 for married taxpayers filing a joint return. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $95,000 (single) or $170,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

No.

What types of homes will qualify for the tax credit?

Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

Only "eligible single-family residences", as defined by House Bill 261, qualify for the tax credit.  An "eligible single-family residence" is (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.

What are the effective dates of the tax credit?

To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and before December 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

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.

How do I claim the tax credit? Do I need to complete a form or application?

You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns). No other applications or forms are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase.

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.

Learn more at http://www.federalhousingtaxcredit.com/2009/faq.php.

Learn more at http://www.hbag.org/page.asp?pg=Georgia%20Homebuyer%20Tax%20Credit.