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.  Also expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is the basic information and guidelines about how the Extended Home Buyer Tax Credit can help you purchase a home.  If you have specific questions or need additional information, always seek out a tax professional or the Internal Revenue Service at 800-829-1040.  But here are the basics:
 

Who Qualifies for the Extended Credit?

First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010. 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.

Current home owners purchasing a home between November 7, 2009 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.


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 Credit is Available?

The maximum allowable credit for first-time home buyers is $8,000.  The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors - The price of the home and the buyer's income.

What is the maximum price I can purchase?

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

What is the maximum Buyer Income?

Under the Extended Home Buyer Tax Credit effective on November 7th 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit.

If your income exceeds these limits, can you 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?

As long as a written binding contract to purchase is in effect on April 30th 2010, the purchaser will have until July 1st, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No and Maybe. 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 of the credit will be recouped on the sale.