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The following paragraphs summarize the first-time homebuyer credit. For more details, see Form 5405 and its separate instructions.

Who Can Claim the Credit

In general, you may be able to claim the credit for a home purchased in 2011 if you are a first-time homebuyer or a long-time resident of the same main home (defined next).

First-time homebuyer. You are considered a first-time homebuyer if you meet all of the following requirements.

1. You (or your spouse if married) are, or were, a member of the uniformed services or Foreign Service or an employee of the intelligence community who meets the requirements explained under Line D in the Form 5405 instructions.

2. You purchased your main home located in the United States:

   1. After December 31, 2010, and before May 1, 2011, or

   2. After April 30, 2011, and before July 1, 2011, if you entered into a binding contract before May 1, 2011, to purchase the home before July 1, 2011.

3. You (and your spouse if married) did not own any other main home during the 3-year period ending on the date of purchase.

4. You do not meet any of the conditions listed under Who Cannot Claim the Credit.

Long-time resident of the same main home. You are considered a long-time resident of the same main home if you meet all of the following requirements.

1. You (or your spouse if married) are, or were, a member of the uniformed services or Foreign Service or an employee of the intelligence community who meets the requirements explained under Line D in the Form 5405 instructions.

2. You (and your spouse if married) previously owned and used the same main home as your main home for any 5-consecutive-year period during the 8-year period ending on the date you purchased your new main home.

3. You purchased your new main home located in the United States:

   1. After December 31, 2010, and before May 1, 2011, or

   2. After April 30, 2011, and before July 1, 2011, if you entered into a binding contract before May 1, 2011, to purchase the home before July 1, 2011.

4. You do not meet any of the conditions listed under Who Cannot Claim the Credit.

Who Cannot Claim the Credit

You cannot claim the credit for a home purchased in 2011 if any of the following apply.

1. The purchase price of the home is more than $800,000.

2. Your modified adjusted gross income is $145,000 or more ($245,000 or more if married filing jointly).

3. You cannot claim the credit for any year for which you can be claimed as a dependent on another person’s tax return.

4. You (and your spouse if married) are under age 18 on the date of purchase.

5. You are a nonresident alien.

6. Your home is located outside the United States.

7. Neither you nor your spouse (if married) was on qualified official extended duty outside the United States as a member of the uniformed services or Foreign Service or an employee of the intelligence community.

8. You acquired the home by gift or inheritance.

9. You acquired your home from a related person.

10. You acquired your home from a person related to your spouse.

Amount of the Credit

First-time homebuyer. Generally, the credit is the smaller of:

• $8,000 ($4,000 if married filing separately), or

• 10% of the purchase price of the home.

Long-time resident of the same main home. Generally, the credit is the smaller of:

• $6,500 ($3,250 if married filing separately), or

• 10% of the purchase price of the home.

Phase-out of the credit. You are allowed the full amount of the credit if your modified adjusted gross income (MAGI) is $125,000 or less ($225,000 or less if married filing jointly). The phase-out of the credit begins when your MAGI exceeds $125,000 ($225,000 if married filing jointly). The credit is eliminated completely when your MAGI reaches $145,000 ($245,000 if married filing jointly).

Modified adjusted gross income (MAGI). Your modified adjusted gross income is the amount from Form 1040, line 38, increased by the total of any:

• Exclusion of income from Puerto Rico, and

• Amount from Form 2555, Foreign Earned Income, lines 45 and 50; Form 2555-EZ, Foreign Earned Income Exclusion, line 18; and Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, line 15.

DIRECT SOURCE: IRS.GOV

AL Grant

Al Grant Realty Group – Re/Max Allegiance

Office Phone: 202-580-6607 – Cell Phone: 202-256-8592

Web: www.algrantrealtygroup.com

Email: al@algrantrealtygroup.com

Blog: www.algrantsblog.wordpress.com

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