Thursday, November 12, 2009

New $6,500 Credit for Existing Homeowners

A taxpayer is eligible for a credit up to $6,500 ($3,250 if separate returns are filed) provided the taxpayer (and if married, the taxpayer’s spouse) has owned the same principal residence for any five consecutive years during the eight-year period ending on the date of purchase.

Effective for purchases after November 6, 2009.

No credit is allowed if the purchase price of the home exceeds $800,000.

No credit is allowed unless the taxpayer has attained age 18 as of the date of purchase, unless the taxpayer is married and his or her spouse is age 18 or older.

No credit is allowed if the taxpayer is claimed as a dependent on another taxpayer’s return for the tax year of purchase.

No credit is allowed unless the taxpayer attaches a properly executed copy of the settlement statement that is used to complete the purchase to his or her 2009 return.

The first-time home homebuyer credit phases out for taxpayers with a modified adjusted gross income between $125,000 and $145,000 ($225,000 and $245,000 for joint filers) for the year of purchase.