Buyer Resources - Taxes - Homebuyer Tax Credit
In finding common ground to help stimulate the reeling housing industry, President Barack Obama has
signed legislation that extends the first-time homebuyers tax credit and expands the law to include
repeat homebuyers.
The U.S. Senate had earlier passed a bill to extend and expand the popular program and the House
agreed without making changes.
How the homebuyer tax credit will work:
- Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000
for first-time homebuyers and $6,500 for repeat buyers who purchase between December 1, 2009
and May 1, 2010. First-time homebuyers are defined as people who have not owned a home in the
previous three years. Repeat buyers must have owned their current home at least five years. The
credit cannot be used for houses costing more than $800,000.
- Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must
be final by June 30, 2010.
- Military deadline: The deadline is extended by a year for members of the military who have served
outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.
- Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to
$225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with
incomes up to $245,000 qualify for reduced credits.
- How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit
exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate
refunds can amend their tax returns for 2008 to claim the credit.
- New anti-fraud limitations imposed.
- Cost: $10.8 billion.
Source: Bloomberg Press and Associated Press and confirmed information with the content of the
Senate bill