Homebuyer tax credit extended and expanded?

Mon, Nov 2, 2009

Buying Advice

There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.

Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.

To recap the rumored details:

  1. The tax credit would be $8,000 for first-time home buyers and $6,500 for move-up buyers from December 1, 2009 to April 30, 2010 and the transaction would have to close by June 30, 2010.
  2. Move-up buyers will be eligible, so long as the home they are leaving has been used as their principal residence for 5 years or more.
  3. The income limits for both first-time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.
  4. Cost of the home may not exceed $800,000 to be eligible.
  5. For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return.
  6. Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date.
  7. The amendment includes a military waiver provision, meaning the recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the home buyer tax credit.
  8. The amendment also includes anti-fraud language that provides math authority to the IRS to do greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older as well as requiring a HUD-1 settlement statement to be attached when claiming the credit.

I’ll be sure to post when Congress makes a final decision.

If you have questions about the current first time homebuyer tax credit in place you can read about that here and here.


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Becky Becky Wyatt  
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