Another Go For The First Time Home Buyer Tax Credit
Posted by Benjamin Dona on Thursday, November 12th, 2009 at 5:30pm.
After months of wrangling by Congress and the White House, the $8,000.00 First-Time Home Buyer Tax Credit has finally been given the go ahead for extention. And just to make things interesting, our esteemed leaders in Washington added a twist; all homebuyers who have been in their homes for at least five years can now also get a $6,500.00 when they sell their homes too.
Under this extension, the program will have some new guidelines also. Here is a synopsis of the new changes and requirements.
First Time Home Buyer Tax Credit
- The maximum tax credit remains $8,000 ($4,000 for married individuals filing separately), and anyone who has not owned a home within three years is considered a "First Time Home Buyer."
- A purchase must be under contract by April 30, 2010.
- A purchase under contract by April 30 must close no later than June 30, 2010.
- After December 1, 2009, income limits rise to $125,000 for singles and $225,000 for married couples; up from limits effective through November 30, 2009 of $75,000 for singles and $150,000 for married couples. The tax credit phases out incrementally at each $20,000 increase in income.
- Effective immediately, the maximum home value purchased cannot exceed $800,000. Prior to this extension being signed, First Time Home Buyers had no limitation on the home's cost.
New Existing Homeowner Tax Credit
- An existing homeowner who purchases a home may now claim a tax credit of up to $6,500. To qualify, that owner must have owned and used the same residence as a principal residence for any consecutive five year period in the previous eight years.
- This new Existing Homeowner Tax Credit is effective immediately. Eligible home buyers do not have to wait until December 1, 2009 to close in order to qualify.
- Personal income limits, maximum home value, and contract/closing deadlines are the same as those for First Time Home Buyers.
U.S. Military and Foreign Service Personnel
- Armed service, intelligence service and foreign service personnel on active duty and out of the U.S. for 90 days during any part of 2009 get an additional year to buy their homes – to May 1, 20ll.
- Another benefit is a waiver on the time of occupancy. Military, intelligence and foreign service members do not have to repay the credit if they sell their home in less than three years if they move because of official business.
The new extension also requires a home buyer to attach documentation about the home purchase to his or her income tax return. An audit found that some buyers are claiming the tax credit when they don't deserve it, and investigators continue to seek out fraud. To minimize tax abuse going forward, buyers won't receive the credit without submitting proof to the Internal Revenue Service.
The Home Buyer Tax Credit is collected as part of the normal income tax process. As a credit, it's calculated separately from an individual's income tax, and paid regardless of taxes owed or withheld from income. As always, however, only a finacial advisor or accountant can give buyers specific advice regarding their situation in seeking the benefit of the homebuyer tax credit. For more information visit the IRS website at - www.irs.gov.
And so the beat goes on with the housing crisis.
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