On November 6th, 2009, Congress signed into law The Worker, Homeownership and Business Assistance Act of 2009. This Act extends and expands the first-time home buyer credit allowed by previous Acts. The deadline was extended from November 30, 2009 to April 30, 2010 and the scope was expanded to include repeat buyers, not just first-time home buyers.
How do the new deadlines work?
To qualify, both first-time and repeat buyers must have a written, binding sales contract by April 30, 2010 and must close by July 1, 2010.
What properties are eligible?
The Extended Home Buyer Tax Credit can be applied on purchases of single family residences, including homes, townhomes, condos and co-ops.
What Buyers Qualify?
To qualify as a first time home buyer, the purchaser or his or her spouse may not have owned a residence during the three years prior to the purchase.
To qualify as a repeat buyer, current home owners must have used the home being sold or vacated as a principal residence for five consecutive years within the last eight years.
What Are the Credit Amounts Available?
The maximum allowable credit for first time home buyers is $8,000. The maximum credit for repeat buyers is $6,500. The Act refers to these repeat buyers as “long-term residents.”
How to Apply the Tax Credit.
Buyers can apply the tax credit to their 2009 tax return, filed on or before April 15, 2010. Or buyers can file an amended 2009 tax return. Lastly, the credit can be applied to 2010’s tax return, filed on or before April 15, 2011.
Watch the Income Limits.
The new law raises the income limits for people who purchase homes after November 6, 2009. The full credit will be available to taxpayers with modified adjusted gross incomes up to $125,000 or $225,000 for joint filers.
Those with modified adjusted gross incomes between $125,000 and $145,000, or double those for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
This article is not a substitute for legal advise. Please consult with an Attorney or Accountant for more information as it relates to your specific circumstances. Also, you can read more at the IRS web site here.