Homebuyer Tax Credit Extended

New Deadline Extension to Claim $8,000 Incentive for Home Purchases

Nov 11, 2009

Learn about the new time extension and other important changes made to the first-time homebuyer credit program sponsored by the U.S. government.

The new deadline for most homebuyers is April 30, 2010. The $8,000 credit is available for purchases of a principal residence only. Examples of personal residences include single-family homes, townhomes, condos, and mobile homes.

Purchasers who enter into a written binding contact by April 30, 2010 but have yet to close on a home by this date will have until June 30, 2010 to complete the purchase in order to qualify for the credit. Note that certain individuals serving on official US extended duty (e.g., Armed Forces) have an additional year to claim the homebuyer credit.

Amount of Homebuyer Credit – Limitations on Purchase Price

The first-time homebuyer credit is equal to 10% of the purchase price of a principal residence up to $8,000. Under the new rules, the purchase price of the home cannot exceed $800,000. Prior to the new rules implemented under the “Worker, Homeownership, and Business Assistance Act of 2009,” there was no limit on the purchase price of a principal residence. Note the amount of the credit an individual can claim will vary if the individual files a return under the “married filing separately” status or if two or more unmarried individuals purchase a home together.

Documentation Requirements to Claim Credit

Under the new rules effective November 6, 2009, homeowners must attach a copy of a properly executed settlement statement used to complete a purchase to either their 2009 or 2010 income tax return depending on the year the homeowner chooses to claim the credit. Previously there were no documentation requirements to prove the purchase of a home. This requirement was implemented to prevent the widespread fradulent claims that have been taking place since the $8,000 credit program was introduced in early 2009.

Income Guidelines to Qualify for $8,000 Tax Credit

Effective November 6, 2009, the income limits have been raised, which allow for more people to claim this credit. The new income limit phases the credit out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The old MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers.

The copyright of the article Homebuyer Tax Credit Extended in Personal Tax Planning is owned by Lauren Massie. Permission to republish Homebuyer Tax Credit Extended in print or online must be granted by the author in writing.