In order to be eligible for that credit, buyers must be under contract to purchase the home of their choosing no later than the end of April 2010. If you are considering buying a home and have not yet contacted your Realtor, you will want to do so immediately in order to have time to capture this credit.
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The credit works as cash on the buyer's tax return. If the buyer owes nothing to the IRS, he/she will file for a tax refund and receive a check in the amount of the credit from the federal government. If the IRS is owed, that credit counts as payment to the IRS in part or in full, with any remaining balance being refunded to the home buyer.
Even if a buyer's income exceeds those limits, he/she can still benefit from the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit.
Home buyers earning more than the maximum qualifying income — over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
If you have specific questions or need additional information, you can contact a tax professional or the Internal Revenue Service directly at (800) 829-1040.
If you qualify for a tax credit, you must be under contract before April 30 on the purchase of a home in order to receive your $8,000 (for first-time buyers) or $6,500 (for repeat buyers) benefit. Contact your Realtor immediately if you plan to take advantage of this tax credit. As the end of the month approaches, the time in which to start looking for that home is now.