Fedtaxdq15

In: Business and Management

Submitted By DesJ777
Words 449
Pages 2
In 2010, Harold purchased a new condominium for $ 70,000 to use as his principal residence. Harold files as a single taxpayer. What is Harold's first-time home buyer credit in the following alternative situations? a. Harold purchased the condominium on February 1, 2010. Harold has lived in an apartment he rented since 2002. Harold's 2010 AGI is $ 60,000.
The answer is: $ 7,000 ($ 70,000 × 10%) because Harold purchased the home before May 1, 2010 and he did not own a home in the previous three years, Harold may claim a credit equal to 10% of the purchase price (total credit may not exceed $ 8,000). b. Harold purchased the condominium on February 1, 2010. Harold has lived in an apartment he has rented since 2002. Harold's 2010 AGI is $ 135,000.
The answer is: $ 3,500 ($ 70,000 × 10% × 50%) because Harold purchased the home before May 1, 2010 and he did not own a home in the previous three years, Harold may claim a credit equal to 10% of the purchase price (total credit may not exceed $ 8,000). However, because Harold's AGI is half way through the phase-out range for the credit ($ 125,000 - $ 145,000), he loses half of the credit he was otherwise eligible to claim ($ 135,000 is half way in between $ 125,000 and $ 145,000 so he loses 50% of the credit).

c. Harold purchased the condominium on February 1, 2010. In the six years preceding this purchase, Harold lived in another home he owned. Harold sold that other home on March 1, 2010. Harold's 2010 AGI is $ 60,000.
The answer is: $ 6,500 because Harold purchased the home before May 1, 2010 and because he owned a principal residence for a consecutive five year period during the eight year period ending on the date he acquired the condominium (February 1, 2010), he may claim a credit equal to 10% of the purchase price of the home (but not to exceed $ 6,500). Because $ 6,500 is less than $ 7,000…...

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