The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009. This law extends and expands the first-time homebuyer credit allowed by previous Acts. The provisions of the act state an eligible taxpayer must buy or at least, enter into a binding contract to buy on or before April 30th, 2010 and close on the property by June 30th, 2010. A “first time home buyer” is defined as someone who has not owned a primary home in the last three years. If you are a “first-time home buyer”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $8,000.
A “long-time resident” is defined as someone who has lived in the same primary home for 5 out of the past 8 years. If you are a “long-time resident”, your tax credit will amount to 10% of the purchase price of your new home not to exceed $6,500. The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it. The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010. Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
The act also states for qualifying purchases in 2010, taxpayers will have the option of claiming the credit on either their 2009 or 2010 tax return. The tax credit is also extended to long-time homeowners purchasing a replacement principal residence.
Another interesting factor of the tax credit is the increase of limitation of income that was placed on homeowners interested in claiming the credit.
Members of the military, Foreign Service and intelligence community serving outside the U.S. should also be aware of the new benefits in the law that apply particularly to them.
Q&A:
Must the new house for current homeowners cost more than the old house?
No. For example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6,500 credit.
Can a buyer still qualify if he or she closes after April 30, 2010?
The buyer can qualify as long as a written binding contract to purchase is in effect on April 30, 2010. The purchaser will then have until July 1, 2010 to close.
Will the tax credit need to be repaid?
No repayment is required if the buyer occupies the home for three years or more. If the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.
If you are a first-time home buyer or a current home owner living in your home for at least five consecutive years, now is the time to take advantage of getting a substantial tax credit and a new home
