Long Island Real Estate - Home Buyer Tax Credit Extended & Expanded - by Jackie Connelly-Fornuff

By
Real Estate Agent with Douglas Elliman Real Estate in Babylon NY

Long Island Real Estate - Home Buyer Tax Credit Extended & Expanded

This tax credit is not just for first-time home buyers anymore. This needs to be posted again for a reminder not to miss out on it if you can afford to buy a home!

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.  

The new law also:

  • Authorizes the credit for long-time homeowners buying a replacement principal residence.
  • Raises the income limitations for homeowners claiming the credit. 

Members of the military, Foreign Service and intelligence community serving outside the U.S. should also be aware of new benefits in the law that apply particularly to them.

Following is general information for first-time homebuyers who settled on a new home on or before Nov. 6, 2009.

For 2008 Home Purchases

The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases

The American Recovery and Reinvestment Act of 2009 expanded the first-time home-buyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Home ownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. 

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time home-buyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

General Information

Home-buyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time home-buyer credit. The credit:

  • Applies only to homes used as a taxpayer's principal residence.
  • Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The credit is claimed using Form 5405, which you file with your original or amended tax return.

Comments (3)

Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

Jackie:  This tax credit really is a great motivator for folks who have been considering a move up.  And they don't have to sell their current residence to take advantage.  They could rent it out.  That way they can buy their move up home low, and wait to tell sell their prior home higher. 

Jan 07, 2010 12:45 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

This is a well laid out explanation of the tax credits for your buyers, Jackie.  And now is certainly the time to buy for those sitting on the fence.

Jan 07, 2010 03:26 AM
Jackie Connelly-Fornuff
Douglas Elliman Real Estate in Babylon NY - Babylon, NY
"Moving at The Speed of YOU!"

Hi Chris Ann! Absolutely! That's why this new tax credit is awesome. Have a great day Chris Ann!

Hi Jane! Thank you and they really should get off the fence. Have an awesome day Jane!

Jan 07, 2010 03:32 AM