The Home Buyer Tax Credit is set to expire on April 30. Here are some key details of the credit.
Here are details on the extension and expansion of the U.S. tax credit for homebuyers signed into law on November 6, 2009, by President Obama:
Deadline Extended Into 2010
The tax credit was originally to end November 30, 2009. It has now been extended into 2010. If you have a signed purchase agreement by April 30, and close the transaction before July 1, you’re eligible for the credit.
Most Other Buyers Now Eligible
First-time homebuyers are eligible for a credit of 10 percent of the price of the home, up to $8,000. (Married couples filing individually can receive $4,000 each.) You are considered a first-time buyer if you haven’t owned a principal home in the U.S. in the last three years.
The tax credit has also been expanded to buyers who have owned a home at some period during the last three years and used it as their principal residence for five consecutive years in the last eight. They can receive up to $6,500 – or $3,250 for couples filing as individuals.
No Repayment if You Stay in Home for Three Years
The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.
Caps on Income, Home Price
Individuals who earn up to $125,000, and couples who earn up to $225,000, are eligible for the full credit. Individuals who earn between $125,000 and $145,000 – and couples who earn between $225,000 and $245,000 – can receive a percentage of the full credit.
The maximum purchase price is $800,000. Any home selling for more than that makes the buyer ineligible for the credit.
Taking Advantage of the Credit
You can claim the credit on your 2009 or 2010 tax return. There are also programs in place to enable you to use the funds to help with the down payment.
Applying the Credit to Your 2009 Taxes
You will need to do three things to claim the credit on your 2009 tax return:
- Fill out the applicable IRS form to determine the amount of your available credit.
- Apply the credit when you file your 2009 tax return or an amended return.
- Attach documentation of purchase to your return or amended return.
If You Purchase in 2010
Buyers purchasing in 2010 will have the option to:
- Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009.
- File an amended return for 2009 if their purchase is completed after April 15, 2010.
- Claim the credit on their 2010 tax return.
Call Jana Ledbetter with our Mortgage Lending Team at 618-457-3595 to discuss how this credit can help you.