The buyer claims their tax credit on their Federal income tax return. The tax credit is for a primary residence. Recent home buyers need to complete IRS form 5405 to determine their tax credit. Once determined, they can claim the amount on line 67 of their 1040 income tax return for 2009. The purchase HUD statement from their closing of the home needs to be attached to form 5405. No other paperwork is required.
There have been questions regarding this tax credit being “refundable”. The credit is refundable in that a home buyer credit can be claimed even if the buyer has little or no federal income tax liability to offset. Typically, this involves the IRS sending the buyer monies for a portion or even the entire amount of the “refundable “tax credit.
Another question, what is the difference between a “tax credit” and a “tax deduction”?
A tax credit is a dollar for dollar reduction in what a tax payer owes. A tax deduction (.i.e. .little baby Johnny-dependant deduction) is subtracted from the amount of income being taxed.
Hopefully this may be of help to several of you. Please note this is my understanding of the tax credit. I am not a CPA or tax expert (I am a REAL ESTATE PRO) Therefore this information should be confirmed by a financial tax expert and or the IRS
(Remember .....IRS ends in service) ...so ask and ye shall received!!!
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Monday, February 1, 2010
How does a recent home buyer claim their $8k buyer tax credit ??? Simplified Version
Posted by Gary DiGiorgio at 9:35 AM