New Revised Homebuyer Tax Credit

11/8/2009

A revised homebuyer tax credit bill was signed Friday November 6 extending the tax credit for first-time homebuyers and creating a new tax credit for repeat buyers.

For first time buyers, the tax credit remains at 10 percent of the purchase price up to a maximum credit of $8,000. To qualify, you must buy the home as your principal residence and not have owned a home in the previous three years.

The bill also creates a new credit for people who already own a home and purchase a new one to live in. The credit for repeat buyers is 10 percent of the purchase price, with a maximum credit of $6,500. To qualify, you must have owned and lived in a home as your primary residence for five consecutive years at any time during the eight years before the replacement home is purchased. This is a great tax credit for move-up buyers who want a bigger house as well as empty nesters looking to downsize.

The deadline to take advantage of the home buyer tax credit is April 30th, 2010. By this date, the buyer must either have closed on the property or have a contract in place with a closing prior to June 30th.

These rules apply to both credits, for first-time and repeat buyers.
-- You must live in the newly purchased home for at least 36 months or you will have to repay the entire credit, with certain exceptions for military personnel or people who die.
-- You must sign a binding contract to purchase the home by April 30, 2010, and close by June 30.
-- You may buy a new or existing home.
-- For homes purchased after Friday, Nov. 6, the price cannot exceed $800,000. Under the old law, there was no price limit. Date of purchase is the date title changes hands.
-- New, higher income limits apply to homes purchased after Friday, Nov. 6. Previously, the first-time home buyer credit phased out for singles with modified adjusted gross income between $75,000 and $95,000 and for married couples filing joint returns with income between $150,000 and $170,000. The new limits, which apply to both first-time and repeat buyers who purchase after Nov. 6, are $125,000 to $145,000 for singles and $225,000 to $245,000 for joint filers.