Modular Homes Tax credit
Federal First-Time Modular Homebuyer Tax Credit
With low real estate prices and large tax credits available, now is the perfect time to build a home. The American Recovery and Reinvestment Act of 2009, signed into law by President Obama on February 17, 2009, increased the first-time homebuyer credit to the lesser of $8,000 or 10 percent of the purchase price for homes purchased after December 31, 2008 and before July 1st 2001 . Prior to this Act, the first-time homebuyer credit was $7,500 and was subject to repayment after three years (over 15 years). Unlike the old credit, the $8,000 credit does not have to be paid back unless the home is sold within 36 months of purchase. If the modular home is sold within this time frame, some of the credit will be required to be repaid. The credit begins to phase out for individual taxpayers with adjusted gross income (AGI) excess of $75,000; $150,000 for those taxpayers married filing jointly.
For purposes of this credit, a “first time homebuyer” is a buyer that has not owned a principal residence during the three-year period prior to the purchase. The $8,000 federal first-time homebuyer tax credit is a refundable credit - a dollar for dollar reduction in tax. This means that the credit can be claimed even if the taxpayer has little or no tax due on their tax return. The credit will offset any tax due (if any), and the remainder will be refunded to the taxpayer. The taxpayer may claim the tax credit once closing is complete. It is important to make sure that closing occurs by July 1st 2010 . The tax credit can be claimed on the homebuyer’s 2010 tax return, or to receive a quicker refund, the taxpayer may amend his or her 2009 tax return. The taxpayer must fill out IRS Form 5405 to receive the credit.
.Additional Items to Consider
In addition to the first-time homebuyer tax credit, there are other tax advantages to home ownership. Taxpayers that itemize their deductions are able to deduct their mortgage interest paid, as long as their mortgage amount is less than $1 million. For most homeowners, the bulk of their mortgage checks go towards interest, so this is a large tax deduction. In addition, property taxes paid for the current tax year are tax deductible. Lastly, when you sell your home, up to $250,000 in sales gain ($500,000 for married joint filers) is tax-free, as long as the homeowner owned the property for two years and lived in it for two of the five years prior to the sale.
There are many tax benefits to purchasing a home, particularly with the current tax credits available. Remember that you must close on your home by July 1st 2010 to qualify, so if you plan to take advantage of these credits you should begin the home-buying process as soon as possible!
















