subject: First-time Homebuyer Tax Credit Extended, Expanded And Broadened [print this page] On November 7, 2009, Congress enacted the Worker, Homeownership and Business Assistance Act (WHBAA) of 2009. This new act extended, expanded and broadened the benefits for the first-time homebuyer credit. The new deadline for reaping the benefits of this program is April 30, 2010. Changes to the program allow higher income limits and make certain existing homeowners eligible for the program. The new act enables many to participate who were previously disqualified.
The WHBAA extends the benefits of the first-time homebuyer tax credit, which is part of the Housing and Economic Act (HERA) enacted in 2008. The original version of the HERA homebuyer tax credit required the credit to be paid back annually by the borrower over a 15-year timeframe. Extended in early 2009, the HERA excluded the payback requirement. In addition, the payback requirement was also excluded in the further extension of the HERA on November 7, 2009.
If you enter into a home sales agreement or close on a home between November 7, 2009 and April 30, 2010, you may be eligible for the first-time homebuyer tax credit, even if you currently own a home. Some of the applications of the act are as follows:
*First-Time Home Buyer - You qualify as a first-time homebuyer if you have not owned any interest in a principal residence three years prior to your purchase. Your maximum benefit is $8,000.
*Replacement Homebuyer - You qualify as an eligible current homeowner if you have lived in the residence being sold for five consecutive years of the eight years prior to selling it and buying another home. Your maximum benefit is $6,500.
*Eligibility Expiration - If you have an executed contract on the purchase of a home, you must close by July 1, 2010 in order to be eligible.
*Income Limits - Were increased effective November 7, 2009, so income up to $125,000 is eligible to receive the benefit.
*Home Cost Limit - Any home is eligible as long as it does not cost more than $800,000.
*Tax Credit Calculation - The tax credit equals 10 percent of the cost of the home up to the maximum credit allowed.
*Claim the Credit - Use IRS Form 5405 to claim the homebuyer tax credit.
*Tax Credit is a Refund - Some are under the impression that the first-time homebuyer tax credit only reduces the amount taxed. Instead, it is actually applied as a credit to any tax you owe on your federal tax return and you receive the remainder, or all, of the credit if no tax is owed.
Do you currently own a home and want to sell it to buy another home? You may qualify. Are you looking to buy a home and haven't owned a home for the past three years? You, too, may qualify. If you are in the process of buying a home, whatever you do, check out the extended first-time homebuyer tax credit to see if you qualify. You have nothing to lose, and everything to gain if you are approved.
