Homebuyer credit extended, enhanced
A November 6, 2009 law extends the popular first-time homebuyer credit of up to $8,000 and creates a new credit worth as much as $6,500 for long-time homeowners.
First-time homebuyer credit:
- The deadline for the $8,000 first-time homebuyer credit is extended past November 30, 2009.
- Buyers must enter into a binding contract to buy a home on or before April 30, 2010 and close on the home by June 30, 2010.
- For purchases after November 6, 2009, the income ceiling to qualify for the full credit is raised, from $75,000 to $125,000 adjusted gross income for single filers and from $150,000 to $225,000 adjusted gross income for married couples filing jointly.
Long-time homebuyer credit:
- A new $6,500 credit is available for homebuyers who have owned a home for a period of five consecutive years in the eight years prior to purchase.
- The credit applies to purchases made after November 6, 2009. Buyers must enter into a binding contract to buy a home on or before April 30, 2010 and close on the home by June 30, 2010.
- The income ceiling to qualify for the full credit is $125,000 adjusted gross income for single filers and $225,000 adjusted gross income for married couples filing jointly.
- For more detailed information, see New $6,500 Homebuyer Credit for Long-Time Homeowners.
Some military, federal employees get extra one year to qualify
Military service members and certain other federal employees serving outside the country have an extra year to to qualify for a homebuyer credit. Eligible taxpayers must enter into a binding contract to buy a principal residence on or before April 30, 2011.
Important requirements about claiming the homebuyer credit
How and when you claim the credit depends on when you purchase your home.
- If you bought your home at any time during 2009, you can claim the credit when you file your 2009 taxes in 2010.
- If you purchased your home on or before November 6, 2009, you have the option to amend your 2008 tax return. But you might find it more convenient to wait, until you file your regular 2009 return. See First-Time Homebuyer Credit: How to Amend 2008 Return for 2009 Purchase.
- If you bought your home after November 6 and before January 1, 2010, you can not amend your 2008 tax return using TurboTax, as a result of changes the IRS made to comply with the new law. Claim the credit when you file your 2009 tax return.
- Those who buy in 2010 can choose to claim the credit when they file either their 2009 or 2010 tax returns.
Hoping to buy a home using the credit in 2010?
Keep in mind that you can not claim it on your tax return until you have closed the sale.
Consider filing your 2009 taxes early in 2010, especially if you're getting a refund. Once you buy a home, you can amend your 2009 return to claim the credit.
NEW: Taxpayers who claim the credit on their 2009 tax returns can not e-file.The IRS requires that they file a paper return instead and attach the settlement sheets showing that the home sale closed. This IRS requirement applies to all methods and brands of tax preparation, not just to TurboTax.
How the first-time homebuyer credit works
- The credit is equal to 10 percent of the home purchase price, up to a limit of $8,000.
- If you qualify for the credit when you file your regular tax return, either your refund will be increased or your taxes reduced by as much as $8,000.
- You can keep the credit, as long as you own the home for at least three years.
- The credit does not apply to any home purchased for more than $800,000.
- The credit is not available if you buy your home from a close relative, such as your spouse, parents, grandparent, child or grandchild -- or a close relative of your spouse.
