First-Time Home Buyer Tax Credit Extended, Move-Up Buyers Included

Congress recently extended the first-time home buyer tax credit (which was due to expire November 30, 2009) and expanded the opportunity to include qualified move-up home buyers, as well. Qualified first-time buyers are those who have not owned a principal residence in the three years prior to closing/settlement on the new home. Qualified long-time homeowners are those who have lived in their current home for at least a five-consecutive-year period of the previous eight years.

The new rules below are for principal residences purchased after November 6, 2009 but by April 30, 2010 with closing/settlement by June 30, 2010.

• First-time buyer credit up to $8,000 ($4,000 each if married filing separately); no more than 10% of home’s purchase price.
  
  
• Move-up buyer credit up to $6,500 ($3,250 each if married filing separately); no more than 10% of home’s purchase price.
  
  
• Qualified buyers have Modified Adjusted Gross Incomes up to $125,000 for single filers, $225,000 for married-joint filers. A reduced credit is available for MAGIs up to $20,000 over those limits.
  
  
• Maximum purchase price of home: $800,000.
  
  
• Tax credit does not have to be repaid if buyer lives in the home for the first 36 months.
  
  
• Buyers must be 18 or older.
  
  
• Buyers must attach a settlement statement to the tax return on which they claim the credit.
  
  
• Those who buy in 2010 (before the deadline) can claim the credit on either their 2009 or 2010 tax returns using Form 5405.
  
  
• Qualified members of the U.S. armed forces, military intelligence, or foreign service on overseas deployment for 90 days or more in 2008 or 2009 have until April 30, 2011 to purchase a principal residence and claim the tax credit.