Rushed home shoppers are breathing a little easier now that the Worker, Homeownership, and Business Assistance Act of 2009 has extended the famous home buyers tax credit. The extension is actually better than most home shoppers hoped for. The dust has settled and there’s great news in the details of the revised program for people who need assistance qualifying for and purchasing a principal residence.
Not only can first-time homebuyers qualify for a tax credit of up to $8,000, repeat home buyers could receive a tax-credit windfall of up to $6,500. Can we hear a “hallelujah?”
Here’s the low-down:
In order to qualify for an $8,000 tax-credit, the purchaser must have purchased the home between Jan. 1, 2009 and on or before April 30, 2010. If a binding sales contract is in place by April 30, 2010, a purchase completed by June 30 may qualify.
Uncle Sam’s gift to repeat homebuyers (this is new to the tax-credit package) is a $6,500 tax credit if the purchaser has owned a home for five consecutive years out of the prior eight years. The transaction has to take place between Nov. 6, 2009 and April 30, 2010. Binding sales contracts signed by April 30 will likely qualify if the sale is closed by June 30.
Limitations
Now, like most governmental gifts associated with tax credits, this one has some stiff limitations. The income limits have changed since the original stimulus package was announced. There are some important sales dates to remember.
1. Sales occurring after Nov. 6, 2009 and on or before April 20, 2010
2. Sales occurring between Jan. 1, 2009 and Nov. 6, 2009
Income limits for sales occurring after Nov. 6, 2009 and on or before April 20, 2010 are as follows: $125,000 for individuals and $225,000 for married couples filing jointly.
The income limits for sales occurring on or after Jan. 1, 2009 and on or before Nov. 6, 2009 are $75,000 for individual taxpayers and $150,000 for married couples filing jointly.
Homes priced over $800,000 aren’t eligible for either credit. Some expanded tax credit benefits are afforded members of the military, the foreign service and the intelligence community. For a detailed description of those benefits visit the official Homebuyer Tax Credit website.
More good news: homes purchased in 2010 can be claimed on an amended 2009 income tax return.
Sorry, Kids
The federal government had some concern when young – like, 3-year-old – children purchased homes in 2009 and claimed the tax credit on their parents’ behalf. The original deal didn’t specify how old the purchaser had to be – only that the purchaser had to meet income and homeownership requirements.
The new draft requires home purchasers be 18 or old. They can’t be claimed on someone else’s return and it’s likely the IRS will be sticklers about this given the eyebrows raised when fraudulent claims were discovered this year.
Neither of these tax credits have to be repaid, unless the qualifying home is sold again – or stops being the buyer’s principal residence within three years of the initial purchase (you can’t buy a home, live in it for a few months and then rent it out).
Taxpayers will be required to submit a copy of the HUD-1 settlement statement and IRS Form 5405 to claim either tax credit.
Contact us today to find the perfect qualifying home and claim your stimulus tax credit.
