Due to the success of the 2009 Homebuyer Tax Credit program lawmakers (on November 6, 2009) have extended and expanded eligibility for the $8000 Homebuyer Tax Credit into 2010. This popular rebate program proved to be an incentive to first time homebuyers and caused a direct increase in home sales at the end of 2009. The original program was due to expire on November 30, 2009. The Worker, Homeownership, and Business Assistance Act of 2009 extends this deadline for closing on the homes until April 30, 2010 or until June 30, 2010 for those buyers who have a binding contract in effect by the end of April 2010.
To qualify as a first time homebuyer the buyer must not have owned a primary residence in three years previous to the purchase date. Lawmakers added a $6,500 rebate for persons who are considered a long-time resident by owning a previous home for five consecutive years during the eight years prior to making their new purchase. A 2010 qualifying purchase may be claimed as a credit on either a 2009 or 2010 tax return. The First-Time Homebuyer Credit tax form is IRS Form 5405. Buyers who purchase homes either before or after the date of November 6, 2009 must use this form. If a buyer has purchased their home prior to November 6, 2009 and selects their option of claiming the credit on their 2008 tax return they use the older version of Form 5405.
There are limitations and exceptions to this bill as follows:
- Buyers must be 18 years of age or older to qualify.
- If the home is sold of ceases to remain the taxpayer’s primary residence within three years of purchase the entire credit amount must be repaid to the government.
- The tax credit is fully refundable; meaning even those taxpayers who owe zero taxes will receive the entire amount.
- There are income limits of $125,000 for single taxpayers and $225,000 for joint filers. There are some reductions in credit amounts for taxpayers who earn up to $145,000 for individuals or $245,000 for married taxpayers. If your income is higher you do not qualify for this credit.
- Dependents may not claim this tax credit.
- If the purchase price of the home exceeds $800,000 there is no credit available.
- Those in the Military have an extra year until the same dates in 2011.
Posted by Ben Nicolas on