The Federal Homebuyer Tax Credit income limits have been increased and the program's deadlines have been extended through April 30, 2010.

A tax credit of up to $8,000 is available for qualified first-time homebuyers purchasing a new or resale home. Up to $6,500 is available for repeat homebuyers (existing homeowners) who have owned their home for the last 5 years.

This tax credit is “refundable”, meaning that if you have owe less in taxes than the amount of the tax credit, the government will issue you a check for the difference.

Expanded tax credit benefits may apply for members of the military, the foreign service and the intelligence community.

Am I a first-time homebuyer?  A “first-time homebuyer” is defined as anyone who has not owned a primary home for at least 3 years. Rental properties or summer homes are not considered in this case. As to married couples, neither spouse can have owned a primary residence in the last 3 years for either to qualify.

How much do I qualify for?  Tax credit = 10% of the home’s price up to $8,000.

The tax credit applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010.  If a binding sales contract is signed by April 30, 2010, the home purchase can be completed as late as June 30, 2010 (when the title to the property transfers to the home owner).
How do I know if I qualify?  Qualifications are based on income limits, homeownership (of you or your spouse), and emancipated status.
Income Limits:  After January1, 2009 up to November 6, 2009, there are income limits of $75,000 gross annual income minus deductions ($150,000 for married couples, if filing joint tax returns).

After November 6, 2009, there are income limits of $125,000 ($225,000 for married couples, if filing joint tax returns).  Partial credits of less than $8,000 are available for some taxpayers whose gross annual income exceeds these income limits.
Home Ownership:  If you or your spouse have owned a primary residence in the last 3 years but have not owned and lived in the home for at least the last 5 years, you do not qualify for tax credit.
Emancipated Status:  Homebuyers must be over 18 years of age and may not be claimed as dependents by other taxpayers to qualify.

How do I apply for my tax credit?  No applications or pre-approval are necessary.  You simply claim the tax credit on your federal income tax return. Complete IRS Form 5405 to determine your tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns. Finally, just attach a copy of your closing statement (proof of home purchase) to Form 5405.

What kinds of homes qualify?  Any single-family detached home, townhouse, condominium, manufactured home, or houseboat qualifies, as long as it is being purchased as a primary residence.  However, homes priced above $800,000 are not eligible for either the first-time home buyer tax credit or the repeat home buyer tax credit.

Will I have to repay the tax credit?  The tax credit does not have to be repaid unless the home is sold or becomes used as other than the homebuyer’s primary residence within 3 years after the purchase of the home.

Contact one our agents today to find out more about the Federal Tax Credit as it pertains to your home search.