Home Buyer Tax Credit
The Worker, Homeownership and Business Assistance Act of 2009 created new federal legislation for a home buyer tax credit that was signed into law as of November 6, 2009. It extends the $8000 tax credit for first-time home buyers and gives an additional tax credit up to $6500 to existing homeowners buying a replacement principal residence. The tax credit has been extended only for members of the US military, foreign service, and intelligence personnel for home purchases that have a binding agreement by April 30, 2011 and close by June 30, 2011.
First-time Home Buyer
- For single or married taxpayers who have not owned a home within the last 3 years. (Married taxpayers do not qualify if either spouse has owned a home within the last 3 years)
- Tax credit limit is 10% of the purchase price or $8000 whichever is less and does not have to be paid back.
- Buyer must live in the newly purchased home for at least 3 years; this condition is waived for qualified members who receive government orders to move.
- The income limit for a single taxpayer is $75,000 and $150,000 for married taxpayers filing a joint return for the full tax benefit. The tax credit phases out to zero for single taxpayers making more than $95,000 and $170,000 for married taxpayers.
- Any home such as single family home, condominium, or townhome can qualify for the tax credit as long as it will be used as a principal residence.
Existing Homeowner
- For single or married taxpayers who have lived in the same primary residence for at least 5 years
- Tax credit limit is $6500 for a single or married taxpayer filing jointly or $3250 for married individuals filing separately.
- Applies only to homes purchased as a principal residence and includes single family homes, condominiums, and townhomes.
- The income limit for the full tax credit is $125,000 for single and $225,000 for joint taxpayers with a tax credit phaseout at $145,000 for single and $245,000 for joint filers.
- No credit is allowedfor homes with a purchase price over $800,000
Note: this is not a tax deduction, but a tax credit which is a dollar for dollar credit against taxes owed rather than a reduction in a tax liability. For example if you are a qualified first time home buyer who owes no taxes and was not due a refund, you would still get a refund in the amount of $8000, or if you were getting a $1000 tax refund, you would also receive the additional $8000 for a total refund of $9,000. For qualifying existing homeowners who were due a $1000 tax refund and was making a move in their principal residence, they would also receive the additional $6500 for a total refund of $7500. Another example: If the home buyer owes $3000 in federal income taxes, the tax credit can be applied to the amount owed and receive a refund for the difference.
This new tax credit provides an unprecedented opportunity for qualified buyers to make the move to the dream home they have been wanting. Now is the time to take advantage of this tax incentive before it ends in April 2010 while home prices and interest rates are still low.
Please email or call us with any questions or leave your contact information below for a quick response.
