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.