First-Time Homebuyer Tax Credit Extended & Expanded

By
Education & Training with Genworth Financial

The Worker, Homeownership and Business Assistance Act of 2009 was signed into law on November 6, 2009, and extends and expands the previously passed first-time homeowners tax credit.

There are three major sections to be mentioned (for detailed information about the new law, click here).

1.       Extension

§   The credit was set to expire on November 30, 2009. 

§   The first-time homeowner tax credit is available for those eligible taxpayers who enter a binding home buying contract for a principal residence on or before April 30, 2010.   

§   The eligible taxpayer must close on the home by June 30, 2010.  

§   The amount of the credit remains at 10% of the purchase price, up to $8,000.

§   The taxpayer can take this credit on either their 2009 or 2010 returns using form 5405.

§   The tax credit remains fully refundable, meaning the credit will be paid out to the homeowner even if their tax obligation is less than the amount of the credit.

§   The homeowner does not have to repay this credit unless the home ceases to be the homeowner's principal residence within 36 months of closing.

§   You are not eligible for this credit if you purchase a home from a close relative including: spouse, parent, grandparent, child or grandchild.

§   You are not eligible for this credit if you owned a home at any time during the three years prior to this purchase.

2.       Expansion

§   This law authorizes a tax credit for those homeowners who have owned their principal residence for at least five consecutive years (out of an eight-year period) and purchase a new principal residence.  

§   This tax credit goes to a maximum of $6,500.

3.       Raises the Income Limitation

§   This provision only applies to those people who have purchased homes after November 6, 2009.

§   The credit phases out for individuals with a modified adjusted gross income between $125,000 and $145,000.

§   The credit phases out for joint filers with a modified adjusted gross income between $225,000 and $245,000.

§   For those who purchased the home prior to November 6, 2009, the original phase out schedule applies.

Comments (2)

Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

Thanks for the post. This has been blogged about here  before. But you have included a lot of the details that needed to get the credit so thank you for a great and informative post

Nov 29, 2009 11:49 PM
Steve Richman
Genworth Financial - Raleigh, NC

Thanks for the comment Charlie.  I know it has been talked about before, but the more people that know about it, the better.

Nov 30, 2009 12:01 AM