On November 6, 2009, Congress passed the Worker, Homeownership, and Business Assistance Act of 2009, as part of H.R.3548, which extended the first-time home buyers tax credit deadline and expanded eligibility requirements for purchasers. The bill attempts to increase home sales across the nation and spur the economy.
Extended Deadline – Qualified buyers now have until April 30, 2010 to purchase a home – that is, escrow must close and the title of the property must be transferred into the new purchaser’s name. For buyers who enter into a written, binding contract by April 30, 2010, there is an additional extension of June 30, 2010.
Qualifying Properties -The $8,000 tax credit applies toward the purchase of a primary residence by first-time homebuyers – that is, anyone who has not owned a residence for at least 3 years. Property types can include single family residences, condominiums, townhomes, manufactured homes and new construction.
Increased Income Limits – Income limits for qualified buyers have been increased from their original levels. A single taxpayer may earn up to $125,000 (up from $75,000) and married couples filing jointly may earn up to $225,000 (up from $150,000). Please remember these new income limits only apply on purchases made between Nov. 7, 2009 and April 30, 2010 and are not retroactive. Home buyers who purchased between January 1, 2009 and November 6, 2009 are subject to the original income limits.
Special Rules for the Military – The tax credit deadline was extended for a full year for members of the uniformed services, members of the Foreign Service, or employees of the intelligence community who are on official extend duty outside the United States for at least 90 days between January 1, 2009, and April 30, 2010. Homebuyers must purchase their home before April 30, 2011 to qualify for the credit.
Exclusions – Residential purchases exceeding $800,000 do not apply to the tax credit. The buyer must be over 18 years old at the time of the purchase. Dependents are not eligible. You will be required to repay the credit if you do either of the following: sell your home or if it is no longer used as your primary residence within three years of purchase. Lastly, you are not eligible for the tax credit if you purchased or acquired your home from a family member, spouse or inheritance.
While the tax credit is a great incentive for purchasing, it should not be the deciding factor. If you are serious about buying your first home, do it because you really want to own a property, and not based on a tax credit. There are many rewards to home ownership and they should all be factored into your final decision.
Any additional thoughts or concerns you may have specifically about the $8,000 tax credit should be directed toward your tax consultant or the IRS.
