November 19, 2009

Homebuyer Credit Update-Straight from the IRS

First-Time Homebuyer Credit

From the IRS, November 17, 2009:

"New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:

-- Extends deadlines for purchasing and closing on a home.
-- Authorizes the credit for long-time homeowners buying a replacement principal residence.
-- Raises the income limitations for homeowners claiming the credit.
"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.

"For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

"People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 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."

Some amplification:

1. The up-to-$8,000 credit for first time homebuyers set to expire November 30, 2009, has been extended. A "buyer must have a contract in place before May 1, 2010, and the deal must close before July 1, 2010" ("The Lowdown on Home-Buyer Tax Credits," By Laura Saunders, The Wall Street Journal, 11/12/09).

2. "Taxpayers who have lived in one residence for five consecutive years of the past eight can now qualify for a tax credit of as much as 10% of the purchase price, up to a maximum $6,500, of a new principal residence" (Saunders).

Check out the sources I've listed for much more information.

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