Homebuyer Tax Credit Extended, Expanded & Enhanced

First Time Homebuyers

  • Tax Credit of $8000 or 10% of sales price, whichever is less.
  • Must be “principal residence.”
  • Could not have owned a primary residence within 3 years prior to closing date of new purchase.

Long Time Resident of Same Principal Residence

  • Tax Credit of $6500 or 10% of sales price, whichever is less.
  • 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 States for at least 90 days during the period December 31, 2008, and May 1, 2010.
  • Tax Credit extended one year.

Important Dates

  • Sign a sales contract between December 1, 2009 and April 30, 2010 and close by June 30, 2010.
  • Qualified Armed Forces – December 2, 2008 and April 30, 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 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 Homebuyers

  • Non-resident aliens.
  • If property disposed of before the end of tax year.
  • If property ceases to be principal residence before end of 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.

Payback of Tax Credit

  • If home is sold within 36 months of acquisition, tax credit must be repaid in its entirety.

Types 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 addressed in extension provisions.)