Special Tax Credits
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The Federal First Time Home Buyer Credit $8000
The Move-Up/ Repeat Home Buyer Credit $6500
The Kentucky New Home Tax Credit $5000
$8,000 First-time Home Buyer Tax Credit at a Glance
- The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
- The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
- The tax credit applies only to homes priced at $800,000 or less.
- The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.
- For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
- For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance
- To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
- The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.
- The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
- The tax credit applies only to homes priced at $800,000 or less.
- The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
- Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The Kentucky New Home Tax Credit $5000
Do You Qualify?
You Can Claim the Credit if All of the Following Apply:
- Your qualified principal residence is a single family dwelling;
- Your qualified residence is purchased to be the principal residence of the qualified buyer(s) for a minimum of two (2) years;
- You purchase a new home after July 25, 2009 and before July 26, 2010; and,
- You meet qualifications and receive approval from the Department of Revenue.
You Cannot Claim the Credit if:
- Your application is not received via FAX within seven (7) calendar days from the purchase date. Any application submitted via mail will be denied.
- Your new residence has been previously occupied.
- Your application is received after the New Home Tax Credit cap has been reached.
- You are eligible for first time homebuyer credit under Section 36 of the Internal Revenue Code including the amendment to the homebuyer credit signed into law on November 6 as part of the Worker, Homeownership, and Business Assistance Act of 2009.
- You are building or contracting construction of your own home. The new home tax credit is only for those taxpayers who purchase a new previously unoccupied single-family dwelling. "Purchase" means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence. Homeowners who build newly constructed homes on their own land do not qualify for the credit based on KRS 141.388.
How to Apply
To Apply For the Credit:
- Submit a Kentucky Form 40A103 Application for New Home Tax Credit application via fax within seven (7) calendar days of the escrow closing between the buyer and the seller.
- Kentucky Form 40A103 may be accessed via link to application.
- FAX to the Department of Revenue at (502) 564-3706
The Department of Revenue will notify taxpayers in writing if their application has been approved or denied.
Using the Credit
Approved Buyers
- Qualified buyer(s) approved for the credit will receive a credit allocation letter with a four (4) digit approval code from the Department of Revenue. This letter must be attached to the income tax return filed for the taxable year during which the qualified principal residence was purchased.
- Electronic filers: Information from the credit allocation letter and the New Home Tax Credit Worksheet D (for electronic filers only) must be included with any electronic return submitted. Make sure the software used to submit the return can meet these requirements.
Use of Credit Against Tax Liability
- Credit is claimed on page 1 of your Kentucky tax return.
- Approved credit, up to $5000, applies to Kentucky tax liability, after applying any allowable credit for Family Size Tax Credit, Education Tuition Tax Credit, and Child and Dependent Care Credit.
- For example, if your Kentucky tax liability, after allowable credits, is $7000, then you would be allowed the full $5000 credit and only owe the remaining $2000.
New Home Tax Credit is NONREFUNDABLE
- A nonrefundable credit means that any unused portion will not be refunded and may not be carried back or forward to another tax year.
- For example, if your Kentucky tax liability, after allowable credits, is $2000, then your credit would be limited to the $2000 liability and the remaining amount lost.
Terms Defined
“Approved time” means the one-year period of July 26, 2009 through July 25, 2010.
“Authorization Code” means the four-digit code provided with the credit allocation letter.
A “qualified buyer” is a resident of Kentucky that purchases a qualified principal residence and is not eligible to receive the federal first-time homebuyer credit allowable under the Internal Revenue Code.
A “qualified principal residence” means a single-family dwelling, built to be occupied by a single family. It must be certified by the seller as having never been occupied and must be the principal residence of the qualified buyer for a minimum of two years. It may include a detached house, an attached condominium or townhouse, or a manufactured home, including house trailers and modular homes.
“Purchase” means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence.
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| Do You Qualify? | |
You Can Claim the Credit if All of the Following Apply:
- Your qualified principal residence is a single family dwelling;
- Your qualified residence is purchased to be the principal residence of the qualified buyer(s) for a minimum of two (2) years;
- You purchase a new home after July 25, 2009 and before July 26, 2010; and,
- You meet qualifications and receive approval from the Department of Revenue.
You Cannot Claim the Credit if:
- Your application is not received via FAX within seven (7) calendar days from the purchase date. Any application submitted via mail will be denied.
- Your new residence has been previously occupied.
- Your application is received after the New Home Tax Credit cap has been reached.
- You are eligible for first time homebuyer credit under Section 36 of the Internal Revenue Code including the amendment to the homebuyer credit signed into law on November 6 as part of the Worker, Homeownership, and Business Assistance Act of 2009.
- You are building or contracting construction of your own home. The new home tax credit is only for those taxpayers who purchase a new previously unoccupied single-family dwelling. "Purchase" means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence. Homeowners who build newly constructed homes on their own land do not qualify for the credit based on KRS 141.388.
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How to Apply | |
To Apply For the Credit:
- Submit a Kentucky Form 40A103 Application for New Home Tax Credit application via fax within seven (7) calendar days of the escrow closing between the buyer and the seller.
- Kentucky Form 40A103 may be accessed via link to application.
- FAX to the Department of Revenue at (502) 564-3706
The Department of Revenue will notify taxpayers in writing if their application has been approved or denied.
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Using the Credit | |
Approved Buyers
- Qualified buyer(s) approved for the credit will receive a credit allocation letter with a four (4) digit approval code from the Department of Revenue. This letter must be attached to the income tax return filed for the taxable year during which the qualified principal residence was purchased.
- Electronic filers: Information from the credit allocation letter and the New Home Tax Credit Worksheet D (for electronic filers only) must be included with any electronic return submitted. Make sure the software used to submit the return can meet these requirements.
Use of Credit Against Tax Liability
- Credit is claimed on page 1 of your Kentucky tax return.
- Approved credit, up to $5000, applies to Kentucky tax liability, after applying any allowable credit for Family Size Tax Credit, Education Tuition Tax Credit, and Child and Dependent Care Credit.
- For example, if your Kentucky tax liability, after allowable credits, is $7000, then you would be allowed the full $5000 credit and only owe the remaining $2000.
New Home Tax Credit is NONREFUNDABLE
- A nonrefundable credit means that any unused portion will not be refunded and may not be carried back or forward to another tax year.
- For example, if your Kentucky tax liability, after allowable credits, is $2000, then your credit would be limited to the $2000 liability and the remaining amount lost.
|
Terms Defined | |
“Approved time” means the one-year period of July 26, 2009 through July 25, 2010.
“Authorization Code” means the four-digit code provided with the credit allocation letter.
A “qualified buyer” is a resident of Kentucky that purchases a qualified principal residence and is not eligible to receive the federal first-time homebuyer credit allowable under the Internal Revenue Code.
A “qualified principal residence” means a single-family dwelling, built to be occupied by a single family. It must be certified by the seller as having never been occupied and must be the principal residence of the qualified buyer for a minimum of two years. It may include a detached house, an attached condominium or townhouse, or a manufactured home, including house trailers and modular homes.
“Purchase” means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence.
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