The Home Buyer Tax Credit, initially set to expire on November 30, 2009 has been extended into this year. Additionally, the tax credit has been expanded to include current homeowners looking to purchase a different home. The key points of the tax credit bill is as follows:

  • First-Time Home Buyer Credit
    The $8,000 credit is available to first time buyers defined as a person who has not owned a principal residence for three years prior to the purchase. This applies to both parties in a married couple as well. If one spouse has owned a home for three years, but the other has not, then neither can qualify for the credit.

  • Current Home Buyer Credit
    The tax credit has now been expanded to include current homeowners who wish to purchase a different home. To qualify for the $6,500 credit, a current homeowner has to have owned and lived in their home for five consecutive years of the last eight. Current homeowners do not need to sell their existing home to qualify for the credit. They may hold onto it as a rental property.

  • Timeline
    The credit is available for homes purchased between November 7, 2009 and April 30, 2010. Home purchases in a binding contract by April 30, 2010 will qualify for the credit as long as closing occurs by June 30, 2010.

  • Income Limits
    Single taxpayers with incomes up to $125,000 and married couples with joint income up to $225,000 qualify for the full tax credit. Partial credits are available to single taxpayers with incomes between $125,000 and $145,000 and married couples with earnings between $225,000 and $245,000.

Under the new bill, the tax credit may only be issued for homes purchased for $800,000 or less. The tax credit is a true credit and does not need to be repaid, provided the homeowner stays in the home for at least three years The credit will be paid to eligible taxpayers even if no tax is owed or the credit exceeds the tax owed.

For more details on the Home Buyer Tax Credit email me at jlemarr@fhallen.com.

Posted by:Judy LeMarr