Homebuyer Tax Credit Extension
The first-time homebuyer tax credit has been extended through April 30, 2010. The credit was originally set to expire November 30, 2009. In order to qualify, the buyer must not have owned a principal residence during the three-year period prior to the purchase. In order to qualify for the credit, existing homeowners must have resided in their principal residence for five consecutive years out of the last eight years and must purchase a home to be their principal residence. These buyers are referred to as repeat buyers, and the credit is limited in such circumstances.
Taxpayers who file as single or head-of-household can claim a credit of 10 percent of the purchase price up to $8,000 ($6,500 for repeat buyers), if their adjusted gross income is less than $125,000. Married couples filing jointly must have an adjusted gross income of less than $225,000. Partial credits are available to single or head-of-household taxpayers whose adjusted gross income is between $125,000 and $145,000, and for married couples who file jointly whose adjusted gross income is between $225,000 and $245,000.
The tax credit is for homes that are purchased after November 6, 2009 and before May 1, 2010. If a sales contract is signed by April 30, 2010, taxpayers will qualify for the credit if escrow closes by July 1, 2010. The credit is refundable, and if the amount of income tax owed is less than the credit the taxpayer will be refunded the difference. The credit applies to all homes with a purchase price of less than $800,000. The tax credit does not have to be repaid unless the taxpayer sells or stops using the home as their principal residence within three years after the date of purchase.
