As part of its plan to address the economic challenges, Congress has passed new legislation that extends the First-Time Home Buyer Tax Credit until end of April next year and expands the credit to grant up to $6,500 credit to qualified current home owners.
Many people were waiting for the extension that directly affects realtors, appraisers, title companies, home inspectors, construction companies, etc. and can potentially create more jobs for other industries.
Who qualifies?
First-time home buyers purchasing homes between November 7, 2009 and April 30, 2010.
Current home owners purchasing homes between November 7, 2009 and April 30, 2010 and who have used their current home as a principal residence for five consecutive years during the last eight. First-time home buyers may not have owned a residence during the three years prior to the purchase.
How much is the credit?
The amount is determined based on the price of the home and the buyer’s income.
The maximum credit for first-time home buyers is $8,000.
The maximum credit for current homeowners is $6,500.
Buyer Income.
Effective November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
Can a buyer still qualify if closes after April 30, 2010?
As long as the purchase contract is signed before April 30, 2010, the buyer will have until July 1, 2010 to close.
Will the credit need to be repaid?
No, as long as the buyer occupies the home for three years or more.
If you have a specific question or need additional details, we recommend you to contact a tax professional or the Internal Revenue Service at 800-829-1040.
Homebuyer Tax Credit (revised November 2009)
FEATURE
Jan 1 – Nov 30, 2009
Rules As Enacted
February 2009
Nov 7 – Apr 30, 2010
Rules As Enacted
November 2009
First-time Buyer –
Amount of Credit
$8,000 ($4,000 married
filing separately)
$8,000 ($4,000 married
filing separately)
First-time Buyer –
Definition for Eligibility
May not have had an
interest in a principal
residence for 3 years
prior to purchase
Same
Current Homeowner –
Amount of Credit
No Provision
$6,500 ($3,250 married
filing separately)
Effective Date –
Current Owner
No Provision
November 7, 2009
Current Homeowner –
Definition for Eligibility
No Provision
Must have used the
home sold or being sold
as a principal residence
consecutively for 5 of the
previous 8 years
Termination of Credit
Purchases after
November 30, 2009.
(Becomes April 30, 2010
on November 7, 2009)
Purchases after
April 30, 2010
Binding Contract Rule
None
So long as a written
binding contract to
purchase is in effect
on April 30, 2010, the
purchaser will have until
July 1, 2010 to close
Income Limits
(Note: Increased
income limits are
effective as of
November 7, 2009)
$75,000 – single
$150,000 – married
Additional $20,000
phase out
$125,000 – single
$225,000 – married
Additional $20,000
phase out
Limitation on Cost of
Purchased Home
None
$800,000
November 7, 2009
Purchase by a
Dependent
No Provision
Ineligible
November 7, 2009
Anti-fraud Rule
None
Purchaser must attach
documentation of
purchase to tax return
