Beth Kirbis

Licensed Real Estate Salesperson

 

 

Cell: 716-907-8819

Voice Mail: 716-743-5352

E-Mail: bkirbis@realtyusa.com

President Obama Signs Homebuyer Tax Credit Extension

 

On November 9, 2009, President Obama approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010

 

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate. 

 

Who is Eligible

 

¨ First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.

¨ Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (repeat buyer), may be eligible for up to a $6,500 tax credit.

¨ All U.S. citizens who file taxes are eligible to participate in the program.

 

Income Limits

 

Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.

 

¨ For married couples filing a joint return, the combined income limit is $225,000.

¨ Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit. 

¨ The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

 

Effective Dates

 

The eligibility period for the tax credit is for homes purchased after November 6, 2009 and before May 1, 2010.  However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

 

Types of Homes that Qualify

 

All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence.  Vacation homes and rental property purchases do NOT qualify. 

          

Tax Credit is Refundable

 

A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference. 

For example:

¨ A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government.  If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).

¨ A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government.  If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).

¨ All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

 

Payback Provisions

 

The tax credit is a true credit.  It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase. 

 

__________________________________________________________________________

 

NAHB is providing the information on this web site for general guidance only.  The information on this site does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.  The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers.  Before making any decision or taking any action on this information, you should consult a qualified professional adviser to whom you have provided all of the facts applicable to your particular situation or question.  None of the tax information on this web site is intended to be used nor can it be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer.  The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.