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Home Buyer Tax Credit Extended, Expanded & Enhanced!

Effective December 1, 2009

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)

"The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you by MortgageCurrentcy.com. Interpretations are not guaranteed but we attempt to make them both easy to understand and help you sell more real estate. Check with your local and state authorities to ensure that you meet all requirements and disclosures."

Copyright © 2009 Reprinted with permission MortgageCurrentcy.com