Homebuyer Tax Credit Updates!!!

First-Time Homebuyer Changes

A first-time homebuyer credit applies to individuals who purchase a home on or after April 9, 2008 and before April 30, 2010.  However, if the buyer has the home under contract by April 30, 2010 they have until June 30, 2010 to close and still qualify for the credit.

The adjusted gross income cap of the credit has been increased as well.  It is now $125,000 for single taxpayers and $225,000 for married filing jointly.

Long-Time Homeowners
Who Qualifies

This credit applies to all existing homeowners who purchase a replacement principal residence and have lived in the same principal residence for any five consecutive year period within an eight year period that ends on the date the replacement house is purchased.  For these homeowners, there is a credit equal to 10% of the purchase price, capped at $6,500.  The same caps for adjusted gross income existing in the first-time homebuyer credit also apply to this credit.  This legislation was signed into law on Nov. 6, 2009.  Therefore only homes bought after this date and before April 30, 2010 qualify.  If a home is under contract by this date, the purchaser has until June 30, 2010 to close and still qualify for the credit.  Any home purchase exceeding $800,000 will be excluded from this credit

When Can The Credit Be Claimed?

The credit is taken in the year the taxpayer purchases the home.  The date of purchase is the date title closes.  However, a taxpayer purchasing the home in 2009 may elect to claim the credit on their 2008 tax return instead of waiting to file it on their 2009 tax return.  An amended return may be filed to claim the credit for 2008.  This rule will also apply for homes bought in 2010.  You may file the credit on your 2009 return or wait until filing your 2010 return to claim the credit.

New Filing Requirements For Both Credits

Due to fraudulent credit reporting, the IRS has issued new guidelines for reporting credit.  The following items must be sent with the return when the credit is being filied: a copy of the closing statement (including signatures of all parties, names of seller and buyer, property address and purchase price), a copy of taxpayer’s most recent mortgage statement, and verification that the property is a residence.  To verify the property is a residence at least two of the following items showing taxpayer’s name and address required:  driver’s license, pay statement received in past 2 months, back statement received in past 2 months, or current auto registration.  If the home is newly constructed, an occupancy permit must be submitted for that property.