On November 6, 2009, The President signed the Worker, Homeownership, and Business Assistance Act of 2009, which provided modification to the existing First-Time Homebuyers Credit as follows:
- Available to first-time homebuyers who purchase their homes after November 6, 2009 and prior to April 30, 2010. The extended deadline applies to the purchase of a principal residence before July 1, 2010, by any taxpayer who enters into a binding contract by May 1, 2010, that requires closing before July 1, 2010.
- An increase in Adjusted Gross Income (AGI) limitations. The phase out range for taxpayers filing as single begins at $125,000 and the credit is completely phased out at $145,000. ($225,000 - $245,000 for Married Filing Joint or MFJ).
- The Act established a purchase price limit of $800,000, where if the purchase price exceeds $800,000, the credit cannot be claimed. Even if the purchase price exceeds the $800,000 limit by $1, the credit is not allowed.
- Prior year election extended. A taxpayer may elect to treat a qualifying purchase made after 2008 as made on December 31 of the prior tax year. A 2009 purchase may be reported on a 2008 return and a 2010 purchase may be reported on a 2009 return.
- Credit available for "long-time resident" taxpayers in the amount of $6,500 ($3,250 for Married Filing Separate, or MFS).
A long-time resident is an individual (and, if married, an individual's spouse) who owned and used a residence as a principal residence for any five consecutive year period during the eight year period ending on the date of purchase of a subsequent principal residence.
- Accelerated recapture of the credit rule applies only to the first 36 months after purchase. The full amount of the credit received becomes due on the return for the year the home ceased being the taxpayer's principal residence.
The above is available to provide a basic understanding of the credit available to first-time homebuyers. Prior to entering a purchase of principal residence, please consult with our office to review the particulars of your situation and to obtain detailed tax planning and advice.
