Monthly Archives: November 2009

It is official…Tax Credit for homebuyers has been extended with more!

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.


Important Dates:


  • 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.


Age Limit:


  • 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


  • $800,000


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
  • Houseboats
  • Mobile & Modular Homes
  • New Construction (Note – Date of land acquisition not address in extension provisions)