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House Bill 261, signed into law by Governor Perdue on May 11, 2009 authorizes a limited state income tax credit for the purchase of an eligible single-family residence. The following questions and answers provide basic information about the tax credit. If you have more specific questions, you are strongly encouraged to consult a qualified tax advisor or legal professional about your unique situation.
Who is eligible to receive the tax credit?
Unlike the federal tax credit, Georgia’s Homebuyer Tax Credit is not limited to first-time homebuyers. Instead, anyone who purchases an “eligible single-family residence” during the effective period is entitled to claim the credit against the taxpayer’s state income tax liability (subject to the limitations described below).
How is the amount of the tax credit determined?
The amount of the credit is the lesser of 1.2 percent of the purchase price of an “eligible single-family residence” or $1,800.00.
Is there a limit as to how much I can claim in one year?
Yes. The amount of the state tax credit which may be claimed in a single tax year cannot exceed the taxpayer's income tax liability for that year or one-third of the total amount of the credit allowed, whichever is less. This means a maximum of $600 may be claimed each year. Any excess or unused tax credit amount may be carried forward to apply to the taxpayer's succeeding years' tax liability.
If I qualify for the tax credit, can I apply it against my 2008 taxes?
No. The tax credit does not apply against prior years' tax liability.
Are there income limits?
No
What types of homes qualify for the tax credit?
Only “eligible single-family residences”, as defined by House Bill 261, qualify for the tax credit.
What is an eligible single-family residence?
(1)A single-family structure, including a condominium unit that is occupied for residential purpose by a single family, that is (A) a new residence, a residence occupied at the time of sale, or a previously occupied residence and (B) that was for sale prior to May 11, 2009 and is still for sale after May 11, 2009; or (2) A single-family structure, including a condominium unit, that is occupied for residential purposes by a single family, that is: (A) A residence with respect to which a foreclosure event has taken place and which is owned by the mortgagor or the mortgagor's agent. (B) An owner occupied residence with respect to which the owner's acquisition indebtedness was in default on or before March 1, 2009. Acquisition indebtedness is debt incurred in acquiring, constructing, or substantially improving a qualified residence and which is secured by such residence. Refinanced debt is acquisition debt if at least a portion of such debt refinances the principal amount of existing acquisition indebtedness.
What are the effective dates of the tax credit?
House Bill 261 states that it will become “effective” upon approval by the governor. This occurred on May 11, 2009. However, a separate provision in the legislation provides that the tax credit will apply to purchases made during a six month period commencing on the first day of the month following the effective date and ending on the last day of the sixth month thereafter. Accordingly, it appears that a credit will be allowed against a taxpayer’s state income tax liability for the purchase of one “eligible single-family residence” made during the six-month period commencing on June 1, 2009 and ending on November 30, 2009.
What information do I need to maintain or prepare to be eligible for the tax credit?
To claim the tax credit, a taxpayer who purchases one eligible single-family residence between June 1, 2009 and November 30, 2009 must complete the eligible single-family residence tax credit portion of the 2009 Form IND-CR and include this form when they file their 2009 Form 500. The 2009 IND-CR will be posted to the Georgia Department of Revenue's website in late 2009. The taxpayer must also include with their 2009 Form 500 the following documentation of the eligibility of the single-family residence:
1. A bona fide listing agreement with a real estate agent or broker licensed in this state, or documentation that the eligible single-family residence was for sale directly by the owner without a real estate agent or broker, or other appropriate documentation to validate the eligibility of the single-family residence.
2. A copy of the closing statement.
3. If the residence qualifies because the owner’s acquisition indebtedness was in default on or before March 1, 2009, or because it was a residence with respect to which a foreclosure event has taken place, the taxpayer must supply documentation to show that this was the case.
What if I file an electronic tax return?
The legislation provides that in the event the taxpayer files an electronic return, the documentation shall only be required to be electronically attached to the return if the Internal Revenue Service allows these types of attachments when the data is transmitted to the department. In the event the taxpayer files an electronic return and the documentation is not attached because the Internal Revenue Service does not, at the time of the electronic filing, allow electronic attachments to the Georgia return, the documentation must be maintained by the taxpayer and made available upon request of the commissioner of the department of revenue.
FHA TAX CREDIT MONETIZATION HELPS HOME BUYERS WITH UPFRONT COSTS
June 9, 2009 - First-time home buyers who would otherwise qualify for the $8,000 tax credit, but don’t have the money for a down payment or closing fees, may now be able to get a loan to help cover those upfront costs.
The U.S. Department of Housing and Urban Development (HUD) announced on May 29 that the Federal Housing Administration (FHA) will allow state housing finance agencies to provide second mortgages "monetizing" the tax credit so that borrowers can use the funds toward their down payments and closing costs for the purchase of homes with FHA-insured mortgage loans. “This is great news for thousands of families who want to take advantage of today’s low interest rates, competitive prices, great selection and the federal tax credit that is only available until Nov. 30, but could not save enough money for a down payment and closing costs,” said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla. HUD also announced that FHA-approved lenders may purchase the tax credit from the home buyer in advance, so that the home buyer can use the funds for closing costs or to make a down payment in addition to the 3.5 percent minimum. Home buyers who go directly to FHA-approved lenders will still need to come up with the 3.5 percent minimum down payment that is required for an FHA-insured loan.
Home buyers previously would be able to use the funds from the tax credit only after filing their federal tax returns and had to come up with the pre-purchase costs on their own. NAHB estimates that 40,000 more homes will be purchased due to the new FHA monetization program, in addition to the 160,000 sales already expected as a result of the tax credit. The National Council of State Housing Agencies has a list of states offering first time home buyer tax credit loan programs on their Web site, www.ncsha.org. For information on the $8,000 first-time home buyer tax credit, go to www.federalhousingtaxcredit.com.
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