Can You Claim a Tax Credit as a First Time Home Buyer?

Many people who recently bought a home qualify for a tax credit. The deadline for closing on a home and still being able to qualify for a tax credit was September 30, 2010. If you fall into this category, how do you collect on this credit?

First, make sure that you are able to claim the credit since there are some disqualifiers. You must not have owned a home in the last three years. If you are married, you have to consider the history of your spouse as well. If he or she owned a home during this time, you will not be able to receive a tax credit for the home. This is true even if you weren’t married during those three years. This doesn’t affect those that were unmarried and who bought a home together.

The home that you are trying to get the credit for needs to be your primary residence, which means vacation homes are not allowed. You also can’t claim a home that you bought from a close relative.

If you are able to receive the credit, it is worth 10% of the purchase price of the home, up to a credit of $8000.

To claim the credit, you have to submit several forms. You will submit a 1040 as well as form 5405, which you can find on the IRS site. You also need to send in your settlement sheet. If you don’t have a settlement sheet, you need to enclose a signed copy of the sale contract for the home.