November 13, 2009 10:47 am
Updated Nov. 6,
2009, to reflect new
legislation — more
to be added soon
Look What New To The
Bill
For the first time,
long-time homeowners
who buy a
replacement
principal residence
may also claim a
homebuyer credit of
up to $6,500 (up to
$3,250 for a married
individual filing
separately). They
must have lived in
the same principal
residence for any
five-consecutive
year period during
the eight-year
period that ended on
the date the
replacement home is
purchased
New Legislation
New legislation, the
Worker,
Homeownership and
Business Assistance
Act of 2009, which
was signed into law
on Nov. 6, 2009,
extends and expands
the first-time
homebuyer credit
allowed by previous
Acts. The new law:
Extends deadlines
for purchasing and
closing on a home.
Authorizes the
credit for long-time
homeowners buying a
replacement
principal residence.
Raises the income
limitations for
homeowners claiming
the credit.
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.
For the first time,
long-time homeowners
who buy a
replacement
principal residence
may also claim a
homebuyer credit of
up to $6,500 (up to
$3,250 for a married
individual filing
separately). They
must have lived in
the same principal
residence for any
five-consecutive
year period during
the eight-year
period that ended on
the date the
replacement home is
purchased.
People with higher
incomes can now
qualify for the
credit. The new law
raises the income
limits for homes
purchased after Nov.
6, 2009. 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.
General Information
Homebuyers who
purchased a home in
2008 or 2009 may be
able to take
advantage of the
first-time homebuyer
credit. The credit:
Applies only to
homes used as a
taxpayer's principal
residence.
Reduces a taxpayer's
tax bill or
increases his or her
refund, dollar for
dollar.
Is fully refundable,
meaning the credit
will be paid out to
eligible taxpayers,
even if they owe no
tax or the credit is
more than the tax
owed.
The credit is
claimed using Form
5405, which you file
with your original
or amended tax
return.
For 2008 Home
Purchases
The Housing and
Economic Recovery
Act of 2008
established a tax
credit for
first-time
homebuyers that can
be worth up to
$7,500. For homes
purchased in 2008,
the credit is
similar to a
no-interest loan and
must be repaid in 15
equal, annual
installments
beginning with the
2010 income tax
year.
For 2009 Home
Purchases
The American
Recovery and
Reinvestment Act of
2009 expanded the
first-time homebuyer
credit by increasing
the credit amount to
$8,000 for purchases
made in 2009 before
Dec. 1. However, the
new Worker,
Homeownership and
Business Assistance
Act of 2009 has
extended the
deadline. Now,
taxpayers who have a
binding contract to
purchase a home
before May 1, 2010,
are eligible for the
credit. Buyers must
close on the home
before July 1, 2010.
[Added Nov. 12,
2009]
For home purchased
in 2009, the credit
does not have to be
paid back unless the
home ceases to be
the taxpayer's main
residence within a
three-year period
following the
purchase.
First-time
homebuyers who
purchase a home in
2009 can claim the
credit on either a
2008 tax return, due
April 15, 2009, or a
2009 tax return, due
April 15, 2010. The
credit may not be
claimed before the
closing date. But,
if the closing
occurs after April
15, 2009, a taxpayer
can still claim it
on a 2008 tax return
by requesting an
extension of time to
file or by filing an
amended return. News
release 2009-27 has
more information on
these options.
Questions and
Answers
More information is
available in the
question and answer
section.
Related Items
IR-2009-83,
First-Time Homebuyer
Credit Provides Tax
Benefits to 1.4
Million Families to
Date
The American
Recovery and
Reinvestment Act of
2009: Information
Center
