IR-2009-108, Nov. 24, 2009
A new law that went into effect Nov.
6 extends the first-time homebuyer credit five
months and expands the eligibility requirements for
purchasers.
The Worker, Homeownership, and
Business Assistance Act of 2009 extends the deadline
for qualifying home purchases from Nov. 30, 2009, to
April 30, 2010. Additionally, if a buyer enters into
a binding contract by April 30, 2010, the buyer has
until June 30, 2010, to settle on the purchase.
The maximum credit amount remains
at $8,000 for a first-time homebuyer –– that is, a
buyer who has not owned a primary residence during
the three years up to the date of purchase.
But the new law also provides a
“long-time resident” credit of up to $6,500 to
others who do not qualify as “first-time
homebuyers.” To qualify this way, a buyer must have
owned and used the same home as a principal or
primary residence for at least five consecutive
years of the eight-year period ending on the date of
purchase of a new home as a primary residence.
For all qualifying purchases in
2010, taxpayers have the option of claiming the
credit on either their 2009 or 2010 tax returns.
A new version of Form 5405,
First-Time Homebuyer Credit, will be available in
the next few weeks. A taxpayer who purchases a home
after Nov. 6 must use this new version of the form
to claim the credit. Likewise, taxpayers claiming
the credit on their 2009 returns, no matter when the
house was purchased, must also use the new version
of Form 5405. Taxpayers who claim the credit on
their 2009 tax return will not be able to file
electronically but instead will need to file a paper
return.
A taxpayer who purchased a home on
or before Nov. 6 and chooses to claim the credit on
an original or amended 2008 return may continue to
use the current version of Form 5405.
Income Limits Rise
The new law raises the income
limits for people who purchase homes after Nov. 6.
The full credit will be available to taxpayers with
modified adjusted gross incomes (MAGI) up to
$125,000, or $225,000 for joint filers. Those with
MAGI between $125,000 and $145,000, or $225,000 and
$245,000 for joint filers, are eligible for a
reduced credit. Those with higher incomes do not
qualify.
For homes purchased prior to Nov.
7, 2009, existing MAGI limits remain in place. The
full credit is available to taxpayers with MAGI up
to $75,000, or $150,000 for joint filers. Those with
MAGI between $75,000 and $95,000, or $150,000 and
$170,000 for joint filers, are eligible for a
reduced credit. Those with higher incomes do not
qualify.
New Requirements
Several new restrictions on
purchases that occur after Nov. 6 go into effect
with the new law:
- Dependents are not eligible
to claim the credit.
- No credit is available if the
purchase price of a home is more than $800,000.
- A purchaser must be at least
18 years of age on the date of purchase.
For Members of the
Military
Members of the Armed Forces and
certain federal employees serving outside the U.S.
have an extra year to buy a principal residence in
the U.S. and still qualify for the credit. An
eligible taxpayer must buy or enter into a binding
contract to buy a home by April 30, 2011, and settle
on the purchase by June 30, 2011.
For more details on the credit,
visit the
First-Time Homebuyer Credit page on IRS.gov |