Its part of the HR 3548 Bill called Worker, Homeownership & Business Assistance Act of 2009-Section 11. Read the highlights—but always refer your clients back to their tax advisor for specific questions or unusual circumstances.
First-Time Homebuyers –
§ Tax Credit of $8000 or 10% of sales price.
§ Must be “principal residence”.
§ Could not have owned a home within 3 years prior to the closing date of new purchase.
Long-Time Residents of Same Principal Residence –
- Tax credit of $6,500 or 10% of sales price.
- Must have owned home for 8 years and lived in that home consecutively for 5 years out of those 8 years.
- Current home must have been principal residence.
Special Rule for Members of Armed Forces –
- Member of “Uniformed” Services.
- Member of Foreign Service of the United States.
- Employee of Intelligence Community.
- Extended Duty defined as “Official Orders outside the United Stated for at least 90 days during the period 12-31-08 and May 1, 2010”.
- Tax Credit Dates Extended.
- Sign a sales contract between December 1, 2009 and April 30, 2010 and close by June 30, 2010.
- Qualified Armed Forces – December 1, 2008 and April 20, 2011 and close by June 30, 2011.
Income Limits Increased:
- $125,000 Single
- $225,000 Married
- Modified Adjusted Gross Income (MAGI) – can earn up to $20,000 more than income limits and still get a partial tax credit.
- 18 Years old on Date of Closing
- If married, and spouse is less than 18 years old, other spouse must be 18 years old
Maximum Sales Price
Proof of Purchase
- Copy of HUD 1 must be attached to IRS 5405 “First Time Homebuyer Credit” form.
Ineligible Home Buyers
- Non-resident aliens.
- If property disposed of before the end of the tax year.
- If property ceases to be principal residence before the end of the tax year.
- If property is acquired from a person who is “related” to the homebuyer or if married, the homebuyer spouse (this was added to the HR 3548).
- Income exceeds income limits (MAGI calculations).
- Less than 18 years old.
Pay Back of Tax Credit
- If home is sold within 36 months of acquisition, tax credit must be repaid in its entirety.
Type of Homes That Qualify
- Single Family
- 2-4 Family (one unit must be owner-occupied)
- Townhomes & Condos
- Mobile & Modular Homes
- New Construction (Note – Date of land acquisition not address in extension provisions)