First Time Homebuyer Tax Credit Approved

Homebuyer Tax Credit Expanded to Additional Homebuyers

Changes in the new law:

• Extends deadlines for both purchasing and closing on a home.
• Adds a credit for long-time homeowners buying a replacement principal residence.
• Homebuyers with higher incomes may now be eligible.  

Extended Deadlines for the First Time Homebuyer Tax Credit

An eligible taxpayer must sign a binding contract to buy a principal residence no later than April 30, 2010.  The home purchase must close by June 30, 2010.  (In most cases, it takes 30-60 days from date of contract to actual close of purchase).

Homebuyers that qualify than then claim the first time homebuyer tax credit on either their 2009 or their 2010 tax return.

Tax Credit Expanded to Additional Homebuyers

New to this tax credit - if you've owned a home within the last eight years for a significant amount of time, you may qualify for a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). 

Homebuyers must have lived in the same principal residence for any consecutive five year span out of the past eight years.  The new home purchased must also be the homebuyer's principal residence.

Homebuyers with Higher Incomes Can Now Qualify

The new law raises the income limits for homebuyers purchasing after November 6, 2009.  The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.

Just the Facts - $8,000 First-time Home Buyer Tax Credit.

• The $8,000 tax credit is for first-time home buyers only. In this case, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and or before April 30, 2010.  A binding sales contract must absolutely be signed by April 30, 2010.  However, some additional time is allowed to complete the sale and "close" - the close must occur by June 30, 2010.
• Income Levels that Qualify: for homebuyers who purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• Expanded income levels: for homebuyers who purchase after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Just the Facts - $6,500 Move-Up / Repeat Home Buyer Tax Credit.

• Homebuyers must have owned and lived in their previous home for five consecutive years out of the last eight years in order to be eligible to claim the tax credit.  (for example, if you lived in your home from 2002 to 2007, sold in 2007, and have rented since, you would qualify)
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, some additional time is allowed to complete the sale and "close" - the close must occur by June 30, 2010 - but that contract must have been signed by April 30th, by both seller and buyer. 
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

* Please consultant a tax professional for accurate up-to-date advice and/or guidence on qualifying for this credit.  Stanton Homes does not offer tax advice, and offers this guide for general informational purposes only.

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