Charles Infinger, Enrolled Agent for JK Harris
A new law went into effect 11/6/2009 extending the first-time homebuyer credit 5 months and expanding the requirements to be eligible for the credit. This is a refundable credit, which means it is treated as a payment of tax.
To qualify for the credit, the buyer must enter into a binding agreement to purchase a home by April 30, 2010. The buyer then has until June 30,2010 to close on the home. The maximum credit for a first-time home buyer (someone who has not owned a home during the 3-year period prior to the purchase) remains at $8,000.
The new law also provides a $6,500 credit for others who do not qualify as a first-time homebuyer. To qualify in this way, the buyer must have owned a home that was used as his/her primary residence for at least 5 consecutive years of the 8-year period prior to the new purchase.
For all qualifying purchases made in 2010, taxpayers have the option to claim the credit on their 2009 or 2010 tax returns. The correct form to use for this credit is IRS Form 5405.
The new law raises the income limits for people who purchase homes after 11/6/2009.No credit is available if the purchase price of the home exceeds $800,000.
For more details on this credit, visit the First-Time Homebuyer Credit page on the IRS website, http://www.irs.gov.