The Worker,
Homeownership and Business Assistance Act of 2009 has extended the first time
homebuyer credit. The IRS website states that "Under the new law, an
eligible taxpayer must buy, or enter into a binding contract to buy, a
principal residence on or before April 30, 2010 and close on the home by June
30, 2010. For qualifying purchases in 2010, taxpayers have the option of
claiming the credit on either their 2009 or 2010 return." Other
changes also allow long-time homeowners who buy a new principal house to
qualify for a tax credit, increases the income limitation for homeowners
claiming the credit and gives military and certain federal employees serving
outside of the United States an extra year to purchase a principal home in the
United States and still qualify for the tax credit.
According to the IRS
website "legislative changes in November 2009 expanded and extended the
[first time homebuyer] credit and also added documentation requirements for
claiming the credit." Furthermore, the site states, taxpayers looking to
claim the credit must file a paper return and attach form 5405 as well as a
properly executed copy of the statement used to complete the sale.
Purchasers of resale
homes are asked to include a copy of Form HUD-1, Settlement Statement, or other
statement showing the full legal names of the parties to the agreement, the
property address, sale price and the closing date. Mobile home buyers may be
unable to obtain a settlement statement are asked to include a "copy of
the executed retail sales contract showing all parties' names, property
address, purchase price and date of purchase." Buyers of new construction
homes "where a settlement statement is not available should include a copy
of the certificate of occupancy showing the owner's name, property address and
date of the certificate." Additional information and links to obtain and
complete the applicable forms can be found on the IRS website at www.IRS.com
along with municipality specific instructions.
The November 2009
legislation also extends the credit to long-time residents of the same primary
residence when they purchase a new primary residence. According to the IRS website the
qualification process requires that taxpayers show proof that they have lived
in the initial primary residence for a consecutive period of 5 years
"during the eight-year period ending on the purchase date of the new
home...The "IRS recommends attaching, in addition to the documents
described above, any of the following documentation of the
five-consecutive-year period:
- Form 1098, Mortgage Interest Statement, or
substitute mortgage interest statements,
- Property tax records or
- Homeowner’s insurance records."
Long-time
homeowners who qualify can apply for a credit of up to $6,500 or up to $3,250
for a married individual filing separately. The following requirements for
qualification are from the IRS website and apply to homes purchased after
November 6, 2009:
·
"Purchasers must attach a properly executed
settlement statement to their return.
·
No credit is available if the purchase price of the home
exceeds $800,000.
·
The purchaser must be at least 18 years old on the date
of purchase. For a married couple, only one spouse must meet this age
requirement.
·
A dependent is not eligible for the credit.
·
The new law gives the IRS broader authority to deny
first-time homebuyer credit claims, without having to first audit a taxpayer’s
return. Known as math error authority, this authority applies, retroactively,
to credits claimed on original and amended 2008 returns, as well as to claims
yet to be filed."
Individuals with
higher incomes can now qualify for the credit under the new law when they
purchase a home after November 6, 2009. According to the IRS website "The credit
phases out for individual taxpayers with modified adjusted gross income (MAGI)
between $125,000 and $145,000 or between $225,000 and $245,000 for joint
filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to
$170,000 for joint filers still apply to purchases on or before Nov. 6, 2009."
"Members of the military and certain other federal
employees serving outside the U.S. have an extra year to buy a principal
residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer
must buy, or enter into a binding contract to buy, a principal residence on or
before April 30, 2011. If a binding contract is entered into by that date, the
taxpayer has until June 30, 2011, to close on the purchase. Members of the
uniformed services, members of the Foreign Service and employees of the
intelligence community are eligible for this special rule. It applies to any
individual (and, if married, the individual’s spouse) who serves on qualified
official extended duty service outside of the United States for at least 90
days during the period beginning after Dec. 31, 2008, and ending before May 1,
2010.
In many cases, the credit repayment (recapture)
requirement is waived for members of the uniformed services, members of the
Foreign Service and employees of the intelligence community. This relief
applies where a home is sold or stops being the taxpayer’s principal residence
after Dec. 31, 2008, in connection with government orders received by the
individual (or the individual’s spouse) for qualified official extended duty
service. The credit is still allowable even if this happens during the year of
purchase. Qualified official extended duty is any period of extended duty while
serving at a place of duty at least 50 miles away from the taxpayer’s principal
residence (whether inside or outside the U.S.) or while residing under
government orders in government quarters. Extended duty is defined as any
period of duty pursuant to a call or order to such duty for a period in excess
of 90 days or for an indefinite period."
The first time
homebuyer tax credit has been extended under the Worker, Homeownership and
Business Assistance Act of 2009. The time frame for eligible taxpayers have
been extended to the 30th day of April, 2010 and close the sale on or before
the 30th day of June, 2010. Taxpayers have the option of claiming the credit on
either their 2009 or 2010 return. Long-time homeowners who buy a new
principal house now qualify for the tax credit. There is also an increase in
the income limitation for homeowners claiming the credit. Military and certain
federal employees serving outside of the United States get an extra year to
purchase a principal home in the United States and still qualify for the tax credit.
