On November 5th, the US Congress completed action

on legislation to extend the existing homebuyer tax

credit and expand eligibility for certain existing homeowners.

President Obama signed this legislation into

law on November 6th, 2009.

Who Qualifies ...

 

~ First-time home buyers with adjusted gross incomes up

to $125,000 (singles) or $225,000 (married) can get the full

$8,000 tax credit if they purchase a primary residence

before June 30, 2010 and haven't owned a home in the

past three years. The credit shrinks if your income is over

those levels and is not allowed once income hits $145,000

for singles or $275,000 for married couples.

~ Current homeowners can snag a credit of up to $6,500

if they've lived in their primary residence for five concurrent

years out of the past eight,meet the same income thresholds

as first-time buyers, and purchase a primary residence

before June 30, 2010.

... And Who Doesn't

 

In addition to buyers who top out the income limits, there

are a few other buyers who are excluded.

~ Luxury market: You can't use the new tax credit to buy

a property that costs $800,000 or more.

~ Vacation or investment homes: You can't claim the credit

to buy a second home, vacation residence, or investment.

Also worth noting: You can't take the credit if you acquired

the home as a gift or inheritance or from your spouse,

parents, grandparents, children, or grandchildren.

How Long Do You Have?

 

The new extension actually pushes the deadline back an

additional seven months. Although the credit technically

expires on April 30, 2010, if you have a binding contract by

that date and close by June 30, you'll still qualify. (The original

credit was due to expire November 30, 2009.)

Members of the U.S. armed forces, military intelligence, or

foreign service on qualified extended duty get an extra year

to take either credit. And if you or your spouse has been

deployed overseas for 90 days or more in 2008 or 2009,

you have until April 30, 2011 to claim the tax credit.

When Do You Get the Credit?

 

Glad you asked: Buyers don't actually have to wait to file

their 2010 returns to get the credit. As long as you buy a

home in 2010 before the program expires, you can claim

the tax break on your 2009 federal tax return.

The fact that the credit is refundable means that the home

buyer credit can be claimed even if the taxpayer has little

or no federal income tax liability to offset. Typically this

involves the government sending the taxpayer a check for

a portion or all of the amount of the refundable tax credit.

 

Is There a Catch?

 

The feds don't want to be seen as helping house flippers,

so if you take the credit, you will need to stay put. If you

sell the home or move to a different primary residence

within three years of closing, you'll then be forced to repay

the tax credit.

What if a contractor constructs a home on a lot?

Instead of buying a new home from a home builder, I hired

a contractor to construct a home on a lot that I already own.

Do I still qualify for the tax credit? Yes. For the purposes of

the home buyer tax credit, a principal residence that is

constructed by the home owner is treated by the tax code

as having been “purchased” on the date the owner first

occupies the house. In this situation, the date of first

occupancy must be after Nov. 6, 2009 and on or before

April 30, 2010 (or by June 30, 2010, provided a binding

sales contract was in force by April 30, 2010).

 

Advice for Buyers

 

If you're married and never owned a home, but your spouse

owned one within the past three years, the two of you won't

qualify for the $8,000 first-time home-buyer credit. You will

qualify for the $6,500 credit for current homeowners,

assuming you both meet the other requirements.

But if you want to buy a house with your child, the credit's

available even if you already own a primary residence. Your

child will get the credit of up to $8,000 as long as he or she

meets the other qualifications--even if you own half the

property.

http://www.federalhousingtaxcredit.com

Home Buyer Tax Credit AT A GLANCE

$8,000 First-time Home Buyer Tax Credit

 

• The $8,000 tax credit is for first-time home buyers only.

For the tax credit program, the IRS defines a first time

home buyer as someone who has not owned a principal

residence during the three-year period prior to the purchase.

• The tax credit does not have to be repaid.

• The tax credit is equal to 10 percent of the home’s purchase

price up to a maximum of $8,000.

• The tax credit applies only to homes priced at $800,000

or less.

• The tax credit now applies to sales occurring on or after

January 1, 2009 and on or before April 30, 2010. However,

in cases where a binding sales contract is signed by April

30, 2010, a home purchase completed by June 30, 2010

will qualify.

• For homes purchased on or after January 1, 2009 and on

or before November 6, 2009, the income limits are $75,000

for single taxpayers and $150,000 for married couples filing

jointly.

• For homes purchased after November 6, 2009 and on or

before April 30, 2010, single taxpayers with incomes up to

$125,000 and married couples with incomes up to $225,000

qualify for the full tax credit.

The $6,500 Move-Up / Repeat Home Buyer Tax Credit

 

• To be eligible to claim the tax credit, buyers must have

owned and lived in their previous home for five consecutive

years out of the last eight years.

• The tax credit does not have to be repaid.

• The tax credit is equal to 10 percent of the home’s purchase

price up to a maximum of $6,500.

• The tax credit applies only to homes priced at $800,000

or less.

• The credit is available for homes purchased after November

6, 2009 and on or before April 30, 2010. However, in cases

where a binding sales contract is signed by April 30, 2010,

the home purchase qualifies provided it is completed by

June 30, 2010.

• Single taxpayers with incomes up to $125,000 and married

couples with incomes up to $225,000 qualify for the full tax

credit.