First-Time Homebuyer Credit Extended to April 30,
2010; Some Current Homeowners Now Also Qualify
IR-2009-108, Nov. 24, 2009
WASHINGTON
— A new law that went into effect Nov. 6 extends the
first-time homebuyer credit five months and expands
the eligibility requirements for purchasers.
The Worker, Homeownership, and Business Assistance
Act of 2009 extends the deadline for qualifying home
purchases from Nov. 30, 2009, to April 30, 2010.
Additionally, if a buyer enters into a binding
contract by April 30, 2010, the buyer has until June
30, 2010, to settle on the purchase.
The maximum credit amount remains at $8,000 for a
first-time homebuyer – that is, a buyer who has not
owned a primary residence during the three years up
to the date of purchase.
But the new law also provides a “long-time resident”
credit of up to $6,500 to others who do not qualify
as “first-time homebuyers.” To qualify this way, a
buyer must have owned and used the same home as a
principal or primary residence for at least five
consecutive years of the eight-year period ending on
the date of purchase of a new home as a primary
residence.
For all qualifying purchases in 2010, taxpayers have
the option of claiming the credit on either their
2009 or 2010 tax returns.
A new version of Form 5405, First-Time Homebuyer
Credit, will be available in the next few weeks. A
taxpayer who purchases a home after Nov. 6 must use
this new version of the form to claim the credit.
Likewise, taxpayers claiming the credit on their
2009 returns, no matter when the house was
purchased, must also use the new version of Form
5405. Taxpayers who claim the credit on their 2009
tax return will not be able to file electronically
but instead will need to file a paper return.
A taxpayer who purchased a home on or before Nov. 6
and chooses to claim the credit on an original or
amended 2008 return may continue to use the current
version of Form 5405.
Income Limits Rise
The new law raises the income limits for people who
purchase homes after Nov. 6. The full credit will be
available to taxpayers with modified adjusted gross
incomes (MAGI) up to $125,000, or $225,000 for joint
filers. Those with MAGI between $125,000 and
$145,000, or $225,000 and $245,000 for joint filers,
are eligible for a reduced credit. Those with higher
incomes do not qualify.
For homes purchased prior to Nov. 7, 2009, existing
MAGI limits remain in place. The full credit is
available to taxpayers with MAGI up to $75,000, or
$150,000 for joint filers. Those with MAGI between
$75,000 and $95,000, or $150,000 and $170,000 for
joint filers, are eligible for a reduced credit.
Those with higher incomes do not qualify.
New Requirements
Several new restrictions on purchases that occur
after Nov. 6 go into effect with the new law:
Dependents are not eligible to claim the credit.
No credit is available if the purchase price of a
home is more than $800,000.
A purchaser must be at least 18 years of age on the
date of purchase.
For Members of the Military
Members of the Armed Forces and certain federal
employees serving outside the U.S. have an extra
year to buy a principal residence in the U.S. and
still qualify for the credit. An eligible taxpayer
must buy or enter into a binding contract to buy a
home by April 30, 2011, and settle on the purchase
by June 30, 2011.
***
For more
details on the credit, visit the new Tax Credits
please contact your JACE Agent.
