First Time Homebuyer Tax Credits for 2013

By
Real Estate Broker/Owner with Park Avenue Properties Of Colorado Springs LLC

Taxpayers who own homes will be interested in IRS and first time homeowner tax credits for 2013. Tax credits differ from tax deductions in that tax deductions lower taxable income, and tax credits reduce the tax liability or overall tax amount owed. Two tax credits in particular deserve attention, namely the First-time Homebuyer Tax Credit and the Residential Energy Efficiency Tax Credit.

First-time Homebuyer Tax Credit (FTHBC)

First-time homebuyers may utilize this tax credit for primary residences purchased in 2008, 2009 or through September 30, 2010. The credit reduces taxpayer liability or increases the taxpayer’s refund. Taxpayers receive refunds for this tax credit even if the homeowner owes no tax, or the credit exceeds the tax liability. The credit is essentially an interest-free loan, as recipients must repay the loan over 15 years through the federal income tax return process.

Repayment conditions vary depending upon when the house was purchased. For homes purchased in 2008, the owner must repay 1/15th of the credit each year, with a maximum of $500 per year. Owners who purchased homes in 2009 or 2010, do not need to repay their credit as long as the property remains the primary residence for three years after the purchase.

The repayment amount gets added to any other taxes owed on federal tax returns. The repayment can result in either more taxes owed to the IRS or a reduced refund. Homeowners must attach a Form 5405 to the tax return when making the repayments.

If the owner sells the house or no longer uses it as the primary residence, then this must be submitted to the IRS on Form 5405. The repayment obligation then depends upon when the house purchase was made. Homeowners who purchased in 2008 must pay off the remaining tax credit balance, whether there was a loss or gain on the sale. Owners who purchased in 2009 or 2010 who sell before the three-year requirement must also repay the remaining tax credit balance. Taxpayers must also repay the entire outstanding balance for any home that is destroyed or condemned without replacement. Finally, homes converted to a business or rental must also repay the balance.

The IRS maintains an online look-up tool to assist FTHBC owners with their accounts. The site includes account details such as the purchase year, the amount of tax credit received, the annual repayment amount and account balance.

Energy Efficiency Tax Credit

The tax credit for residential energy improvements was also extended for 2012 and 2013 in the American Taxpayer Relief Act of 2012. These tax credits may be used for home improvements or appliance purchases that increase energy efficiency. This tax credit allows up to $500 total to purchase and install eligible items such as qualified water heaters, furnaces, heat pumps, central air conditioners, new windows or a new roof. More information on the residential energy efficiency tax credit can be found here.

Click here to find homes for sale in Colorado Springs

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
Home Buying
Tags:
tax credit
first time home buyer
fthbc

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the woman to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the printer to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainmaker
974,455
Edward & Celia Maddox
Solutions Real Estate - Queen Creek, AZ
We Take The High Road

Thanks for sharing the tax info.  Good information to pass onto clients.

Mar 11, 2013 09:14 AM #1
Rainmaker
370,271
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL

It is that time of year again time to do the taxes; we need all the benefits we can get for deductions. Thanks for sharing.

Mar 11, 2013 09:44 AM #2
Anonymous
Anonymous
joshua clark

i bought a house in march 2013 just wondering if there are any tax credits at this time

Sep 09, 2013 01:17 PM #3
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the camera to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Show All Comments
Rainmaker
52,495

Tanya Stevenson

Tanya Stevenson, CDPE, 1-719-963-6582
Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the car to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase: