Tuesday, February 15, 2011

TAX TIME - $8, 000

If you bought a home last year, you may be eligible for a tax credit of up to $8,000 when you file your 2010 tax return. But before you start shopping for hardwood floors, make sure you qualify. And even if you're eligible, you'll need to take extra steps to prove that your claim is legitimate.

When you signed the contract to buy your home.To claim the credit on your 2010 tax return, you must have signed a contract to purchase your primary residence before May 1, 2010.
When you closed. Home buyers who closed as late as Sept. 30, 2010, qualify for the credit, as long as their original contract called for the purchase to be completed by June 30. Congress added the extension because many of last year's home purchases involved short sales or homes in foreclosure, and banks have been slow to process those transactions, says John W. Roth, analyst for tax publisher CCH.
Where you lived before you bought the home. For homes purchased Nov. 7, 2009, to April 30, 2010, there are two tax credits: a first-time home buyer credit and a repeat home buyer credit.
The first-time home buyer credit is worth 10% of the purchase price of the home, up to a maximum of $8,000. The law defines a first-time home buyer as someone who hasn't owned a principal residence in the three years before the purchase.