Newly Extended and Expanded Homebuyer Tax Credit

There has been much debate over whether this Tax Credit should have been extended or even expanded to include current homeowners. It was thought that maybe the initial Tax Credit, which was to expire on November 30th, was a waste of taxpayers money. Talk was going around stating the Tax Credit wasn't enough to stimulate the down and out housing market. Debates all around the industry and the country have been asking if the housing market will lead us out of the current recession.

Many questions are yet to be answered. But what is for certain is the fact that the leadership of our country, have collectively decided that the Tax Credit is to be not only extended, but also expanded to include current homeowners. President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548) into law Friday, a day after the House of Representatives approved it by a 403-to-12 vote.

How will the American people respond?

"I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts." Abraham Lincoln 

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Extended Homebuyer Tax Credit

New legislation has been passed and signed into law extending the $8000.00 First-time Homebuyer Tax Credit Program.

First-time buyers who have not own a home as their primary residence for the past three years are still eligible, and the maximum amount remains at $8,000 for married couples, $4,000 for those filing separately.

 A purchase agreement must be signed by April 30, 2010 and close by July 01, 2010 to qualify.

Expanded to Include Current Homeowners

Current homeowners, who have consecutively maintained the home they want to sell as their primary residence for five of the last eight years, are also eligible. The maximum amount for these homeowners is lower: $6,500 for married couples and $3,200 for those filing separately.

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The tax credit may not be used to purchase a home for more than $800,000. All buyers who want to get the credit must include documentation of the purchase on their tax returns

The income limits for both tax credits have been raised to $125,000 for single buyers and $225,000 for married couples.

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How to Get the Extended Home Buyer Tax Credit

You've decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here's what you have to do to get your benefit:

1. Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract by April 30, 2010 and close by July 1, 2010.
    
2.  Decide whether to: 
   • apply the credit to your 2009 tax return, filed on or before April 15, 2010;
   •  file an amended 2009 return; or, 
   • apply the credit on your 2010 return, filed on or before April 15, 2011.
      
3. Attach documentation of purchase to your return.

Documentation of Purchase

Details concerning the precise documents required to confirm your purchase have not yet been released. When this information becomes available, we will include instructions and links to the appropriate forms.

When to Apply the Credit

Buyers purchasing homes on or before December 31, 2009 may claim the credit on their 2009 tax returns.
 

Buyers purchasing in 2010 will have the option to:

•  Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
•  File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
•  Claim the credit on their 2010 tax returns.

If you purchased a home between January 1, 2009 and November 6, 2009, please see: How to Get the 2009 First-Time Home Buyer Tax Credit.

Applying the Credit to Your 2009 Taxes

You will need to do three things to claim the credit on your 2009 tax return:

1. Fill out Form 5405 to determine the amount of your available credit;
2. Apply the credit when you file your 2009 tax return or file an amended return;
3. Attach documentation of purchase to your return or amended return. (Settlement statement)

source - NAR

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