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FIRST-TIME HOME BUYERS TAX CREDIT
The Worker, Homeownership, and Business Assistance Act of 2009
has extended the tax credit of up to $8,000 for qualified
first-time home buyers purchasing a principal residence. The tax
credit now applies to sales occurring on or after January 1, 2009
and on or before April 30, 2010. In cases where a binding sales
contract is signed by April 30, 2010, and closed by June 30,
2010 will qualify.
For sales occurring after November 6, 2009, the Act establishes
income limits of $125,000 for single taxpayers and $225,000 for
married couples filing joint returns.
The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date.
The law defines “first-time home buyer” as a buyer who has not
owned a principal residence during the three-year period prior to
the purchase. For married taxpayers, the law tests the
homeownership history of both the home buyer and his/her
spouse.
For example, if you have not owned a home in the past three years
but your spouse has owned a principal residence, neither you nor
your spouse qualifies for the first-time home buyer tax credit.
However, IRS Notice 2009-12 allows unmarried joint purchasers to
allocate the credit amount to any buyer who qualifies as a
first-time buyer, such as may occur if a parent jointly purchases a
home with a son or daughter. Ownership of a vacation home or rental
property not used as a principal residence does not disqualify a
buyer as a first-time home buyer.
The credit is 10 percent of the purchase price of the home, with a
maximum available credit of $7,500 ($8,000 if you purchased your
home in 2009 or early 2010) for either a single taxpayer or a
married couple filing a joint return, but only half of that amount
for married persons filing separate returns. The full credit is
available for homes costing $75,000 or more ($80,000 in 2009
or early 2010). Long-time homeowners who buy a replacement home
after Nov. 6, 2009, or in early 2010 may qualify for a credit of up
to $6,500, or $3,250 for a married person filing a separate return.
(11/19/09)
The credit is claimed on IRS Form 5405,
First-Time Homebuyer Credit, and filed with your
2008, 2009 or 2010 federal income tax return. (11/12/09)
You cannot take the credit if :
- Your income exceeds the phase-out range.
- You buy your home from a close relative. This includes your
spouse, parent, grandparent, child or grandchild.
- You do not use the home as your principal residence.
-
You are a nonresident alien. (11/19/09)
