Income Tax Implications

First-Time Homebuyer Credit Extended

New homebuyers may still claim the First-Time Homebuyer Credit. Congress recently passed The Worker, Homeownership and Business Assistance Act Of 2009, extending the First-Time Homebuyer Credit and expanding who qualifies.

Here’s what the IRS wants you to know about the expanded credit and the qualifications your clients must meet to qualify for it.

1. The buyer must buy – or enter into a binding contract to buy -- a principal residence on or before April 30, 2010.
2. If entering into a binding contract, the buyer must close on the home on or before June 30, 2010.
3. For qualifying purchases in 2010, the buyer may claim the credit on either the 2009 or 2010 return.
4. A long-time resident of the same home can now qualify for a reduced credit. The resident must have lived in the same principal residence for any five-consecutive years during the eight-year period ending on the date the new home was purchased. The settlement date must be after November 6, 2009.
5. The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.
6. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.
7. The IRS will issue a December 2009 revision of Form 5405 to claim this credit. This form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
8. No credit is available if the purchase price of the home exceeds $800,000.
9. The purchaser must be at least 18 years old on the date of purchase. For married couples, only one spouse must meet this age requirement.
10. A dependent is not eligible to claim the credit.

For more information about the expanded First-Time Home Buyer Credit, visit www.IRS.gov

FA