Thursday, November 12, 2009

2009 First Time Homebuyers Credit - Extended

The $8,000 credit is extended for purchases made before May 1, 2010.

For qualifying taxpayers, the credit also applies to purchases before July 1, 2010, provided the taxpayer has entered into a written binding contract to close on the purchase before May 1, 2010. Effectively, this provision allows taxpayers an additional two months to close.

This one is a true credit. If you, and your spouse if married, have not owned a home in the past 3 years you may qualify for a credit of 10% of the purchase price up to $8,000. This does not have to be paid back, you do not have to pay tax on it, and you can qualify for it if you don't have to file a tax return for any other reason.

Click here for an IRS video.

If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

Who cannot claim the credit? You cannot claim the credit if any of the following apply.

* Your modified adjusted gross income is $95,000 or more ($170,000 or more if married filing jointly).
* You are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. See Form 8859. This rule does not apply for a home purchased in 2009.
* You are a nonresident alien
* Your home is located outside the United States
* You sell the home, or it ceases to be your main home, before the end of 2009
* You acquired your home by gift or inheritance
* You acquired your home from a related person. A related person includes:
Your spouse, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.). A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock of the corporation. A partnership in which you directly or indirectly own more than 50% of the capital interest or profits interests

You must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation. You repay the credit by including it as additional tax on the return for the year the home ceases to be your main home.

If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit.

You can amend your 2008 tax return and claim the credit or claim the credit on your 2009 tax return.


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