Modification of the First-time Homebuyer Tax Credit (New $6500 Credit)
NEW LEGISLATION
On November 6, 2009, President Obama signed into law, “The Worker, Homeownership, and Business Assistance Act of 2009”.
The new law:
1. Extends deadlines for purchasing and closing on a home.
2. Authorizes the credit for long-time homeowners buying a replacement principal residence.
3. Raises the income limitations for homeowners claiming the credit.
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.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.
Taxpayers with higher incomes now qualify for the First-time Homebuyer Credit under the new legislation. The new law raises the income limits for homes purchased after November 6, 2009.
The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before November 6, 2009.
GENERAL INFORMATION
For more information on the First-time Homebuyer Credit, please click on the links for related information.