A $5,000 State Tax Credit went into effect July 26th,2009 for homebuyers who purchase a newly constructed home and are not first-time homebuyers. (In certain Kentucky counties, buyers who already own a home or have recently owned a home may also be eligible for a Mortgage Credit Certificate-- click here to learn more).
This non-refundable tax credit is available to purchasers who close on a newly constructed or never-occupied home between July 26, 2009 and July 26, 2010 and do not claim the $8000 First Time Homebuyers Tax Credit on their federal tax return.
The credit does not apply to the purchase of an existing home that has been occupied, but only to newly constructed homes or homes that have never been occupied (such as a model home or completed home in a builder's inventory).
The credit is non-refundable, which means it is used to offset a tax liability to the state of Kentucky, but cannot result in a tax refund if the tax credit exceeds the amount of tax liability.
This credit is offered exclusively by the state of Kentucky on a homebuyer's state tax return.
To qualify, the new home buyer must use the home as a principal residence. They must also live in the home for at least two years, or the tax credit must be repaid to the state.
A total of $25 million dollars in program funds are available on a first-come, first-served basis until July 24, 2010 or until the funds run out, whichever is first.
The tax credit may be claimed by qualified buyer submitting a completed application via fax within seven calendar days of closing on a new home. The application form is provided by the Kentucky Department of Revenue.
A website will be established by the Revenue Department to explain the tax credit to the public and keep track of the available program funds available in relation to the $25 million dollar cap.
Persons successfully claiming the credit will be provided a form by the Kentucky Department of Revenue that can be used in filing their state tax returns.
Click here to read about the tax credit and how to find forms on the Kentucky Department of Revenue's web site.The information in this article is provided by the Home Builders Association of Kentucky. As always, please consult your tax professional for advice on how this tax credit may apply to your specific circumstances.