First time home buyer tax credit

The American Recovery and Reinvestment Act of 2009 expanded the homebuyer’s first time homebuyer.  The tax credit has been revised and under the“The Worker, Homeownership and Business Assistance Act of 2009 ” many homebuyers will benefit.   While the original tax credit was set to expire November 30, 2009, the United States government extended the tax credit to stimulate the U.S. housing market. 

Home Buyer Tax Credit of up to $8,000 is extended until April 30, 2010. 

• To qualify the purchaser or spouse may not have owned a residence during the three years prior to the purchase.

• A credit of up to $6,500 is granted to home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010 who have used their home being sold or vacated as a principal residence for five consecutive years within the last eight. 
• All U.S. citizens are eligible that file taxes to participate in this program.

Important Facts You Should Know about The Homebuyer Tax Credit

• The Extended Home Buyer Tax Credit may be applied to primary residences only:  single family homes | condo’s | town homes and co-op’s.  Vacation homes and rental properties do not qualify.  

• The amount of the Buyer’s tax credit is determined by the price of the home and the buyers income.  

• Homes under $800,000 or less qualify.

• Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit.  At least one of the home buyers must be 18 to be eligible and dependents of homebuyers are not eligible for the tax credit.  

• Even if the buyer’s income exceeds the limits they can still receive a portion of the credit.  The credit amount decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly.

• The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

• Under the Extended Home Buyer Tax Credit, as 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.  Don’t forget to attach a properly executed settlement statement (closing statement) to your return.  

The buyer does not need to repay the tax credit IF they occupy the property for three years or more.  If the property is sold during the 3 year period, the full credit will have to be repaid on the sale.  

Additional Benefits For Military Personnel and Some Federal Employees

•  Members of the uniformed services, members of the Foreign Service and employees of the intelligence community serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.

•   The credit repayment requirement is waived for some members of the uniformed services, members of the Foreign Service and employees of the intelligence community.  Some restrictions apply.  

Things to Consider With the Extended Home Buyer Tax Credit

• Contact a tax professional for any questions in regards to the IRS and the Extended Home buyer tax credit.  

• You may be eligible for a refundable credit which means that if the amount of income taxes you owe are less than the credit the qualify for, the government will send you a check for the difference.  

• First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010.

• The credit may not be claimed before the closing date.

Remember different laws and guidelines apply to the original First Time Homebuyers tax credit.  Contact us and we would be happy to assist you in home buying experience! 

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