Rochester Real Estate:
First-Time Homebuyer Credit
Homebuyer Credit Expanded and Extended
The Worker, Homeownership and Business Assistance Act of 2009, signed into law on
Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract
to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying
purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010
return.
The new law also:
- Authorizes the credit for long-time homeowners buying a replacement principal
residence.
- Raises the income limitations for homeowners claiming the
credit.
Members of the military, Foreign Service and intelligence community serving
outside the U.S. should also be aware of new benefits in the law that apply particularly to them.
Following is general information for first-time homebuyers who settled on a new
home on or before Nov. 6, 2009.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for
first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a
no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax
year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time
homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the
new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a
binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home
before July 1, 2010. [Added Nov. 12, 2009]
For home purchased in 2009, the credit does not have to be paid back unless the
home ceases to be the taxpayer's main residence within a three-year period following the purchase.
First-time homebuyers who purchase a home in 2009 can claim the credit on either a
2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before
the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax
return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more
information on these options.
General Information
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take
advantage of the first-time homebuyer credit. The credit:
- Applies only to homes used as a taxpayer's principal residence.
- Reduces a taxpayer's tax bill or increases his or her refund, dollar for
dollar.
- Is fully refundable, meaning the credit will be paid out to eligible
taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or
amended tax return.
From article found on IRS website:
http://www.irs.gov/newsroom/article/0,,id=204671,00.html
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