On November 6, the first time home buyer tax credit was enhanced and updated. Here are the changes to the 2009 version of the first time home buyer tax credit resulting from the new legislation:
- Deadline extended: Now you have until April 30, 2010 to establish a contract to purchase a home and June 30, 2010 to close on that home in order to receive the credit.
- Income limits increased: The phaseout of the credit does not begin until incomes reach $125,000 (single) and $225,000 (married filing jointly).
- Maximum price established: The credit is not available for homes which sell for more than $800,000.
Other key considerations remain the same:
- Credit value unchanged: $8,000 or 10% of the purchase price, whichever is lower.
- Pick your favorite tax return: You can file for the credit in either the year of sale of the prior year. (For example, if you buy a home on November 30, 2009, you can file for the credit on your 2009 or 2008 return. If you buy a home on April 3, 2010, you can file on your 2009 or 2010 return.)
- Still not for flippers: You have to own the home and use it as your principal residence for at least three years or you will forfeit the credit.
But wait, there’s more: the first time home buyer tax credit isn’t just first time home buyers anymore! The new law establishes a credit for people who have owned a home for at least five years. If you’ve owned a home for four years and want to take advantage of the credit, sorry, but there is no credit for you. In your comments below, please remember that I am only the messenger.
Key Points on the Not a First Time Home Buyer Tax Credit (Replacement House Credit):
- Better not have just got there: You must have lived in a home you own for at least five straight of the previous eight years.
- Lower credit: Only $6,500 for this credit.
All the other key points, including the need to own your next home for at least three years, income restrictions, expiration date, and filing requirements are the same as they are for the first time home buyer tax credit.
If you purchased your home during 2009 but before November 6, 2009, read about the 2009 version of the first time home buyer tax credit.
If you purchased your home during 2008 and after April 9, 2008, read about the 2008 version of the first time home buyer tax credit.
If you purchased your home after June 30, 2005 and before April 10, 2008 and want to know why you get nothing, not even the chance to take part in the new part of the credit, read this article where you can gather precious little insight as to the government’s thinking. However, it’s a good place to vent.
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@Kay: Your realtor is correct.
If I will be under contract before 4/30/10 but won’t close until after 6/30/10 can I still monetize the credit or will it be disallowed?
@Oliver: You must close by 6/30/10 to get the credit . . . unless they change the law again.
I have a contract now and will close it before Jun 2010. Can I get the credit from 2009 tax return? If I do my 2009 tax return before 04/15/2010, can I amend it later for the credit?
@Mike: Yes and yes.
I purchased my first home ever on March 18, 2010 from my parents. I paid the full appraisal amount for my home and financing is in my name only as I am a single woman. Can I take advantage of the tax credit on my 2010 tax return?? I have already filed my 2009 tax return.
@Mindy Reynolds: A purchase of a home (no matter the price) from your parents is disqualified from the first time home buyer tax credit.
I just closed on my very first home on 3/2010, I was living with my husband, but separated in the home: who had purchased many homes before, the last one he purchased in 5/2008 I had no say in it, but now the IRS is saying I am not a first time home buyer or anything else. All, they gave me was my interest paid on my new home. I filed jointly with him so they say I get nothing else. You wait all this time for people to make up the rules as they go along. If, I am not a first time home buyer no one is. Meanwhile, he is still leaving in the home that I have nothing to do with and will get nothing when he sells it.
We purchased a home from my husband’s sister on March 2010. Do we still qualify for the first time buyer credit? The IRS website showed the translation between grandparents/parents/child/
grandchild are disqualify the credit. But it did not mention if purchasing from sister/brother. Please advise.
@Michelle: Siblings are not excluded. Can’t tell you why.