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Home Buyer

Extended Home Buyer Tax Credit 2009/2010

Bringing the Dream of Homeownership Within Reach

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

  • Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
  • Expands the credit to grant a $6,500 credit to current home owners purchasing a new or existing home between the date the bill is signed by President Obama and April 30, 2010.

Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

 

Who Qualifies for the Extended Credit?

  • First-time home buyers who purchase homes between the date the bill is signed by President Obama and April 30, 2010.
  • Current home owners purchasing a home between the date the bill is signed by President Obama and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you purchased a home between January 1, 2009 and the date the bill is signed by President Obama, please see: 2009 First-Time Home Buyer Tax Credit.

 

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

 

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum credit allowed for current homeowners is $6,500.

 

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by tow additional factors:

  1. The price of the home.
  2. The buyer's income.

Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

 

Buyer Income
Under the Extended Home Buyer Tax Credit which is effective on the date the bill is signed by President Obama single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

 

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and the date the bill is signed by President Obama, please see 2009 First-Time Home Buyer Tax Credit.

 

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

 

The credit 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.

 

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

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.

 

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

 

The modifications in the column labeled “December 1 – April 30, 2010” become effective when President Obama signs the bill. All changes made to the current credit become effective on that date, as well.

 

FEATURE Jan 1 – Nov 30, 2009
Rules as enacted
February 2009		 December 1 – April 30,
2010 Rules as enacted
November 2009
First-time Buyer – Amount of Credit $8000
($4000 married
filing separate)		 $8000
($4000 married
filing separate)
First-time Buyer –
Definition for Eligibility		 May not have had an interest in a principal residence for 3 years prior to purchase Same
Current Homeowner –
Amount of Credit		 No Provision $6500
($3250 married
filing separate)
Effective Date –
Current Owner		 No Provision Date of Enactment
Current Homeowner –
Definition for Eligibility		 No Provision Must have used the home sold or being sold as a principal residence
consecutively for 5 of the
previous 8 years
Termination of Credit Purchases after
November 30, 2009.
(Becomes April 30, 2010 on Date of Enactment.)		 Purchases after
April 30, 2010
Binding Contract Rule None So 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.
Income Limits
(Note: Increased income limits are effective as of date of enactment of bill)		 $75,000 – single
$150,000 – married
Additional $20,000 phase out		 $125,000 – single
$225,000 – married
Additional $20,000 phase out
Limitation on Cost of
Purchased Home		 None $800,000
Effective Date of Enactment
Purchase by a Dependent No Provision Ineligible
Effective Date of Enactment
Anti-fraud Rule None Purchaser must attach
documentation of purchase to tax return

 

Frequently aked question about the new tax credit.