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Monday, November 09, 2009FIRST TIME HOME BUYER CREDIT-EXTENDED AND EXPANDED
The “Worker, Homeownership, and Business Assistance Act of 2009”
Effective November 7, 2009, there are new law changes that go into effect for qualifying for the Homebuyer Credit. Note that this extends the first time homebuyer credit (FTHTC) and also allows a credit for homeowners who are (1) higher-income taxpayers and (2) to existing homeowners who are qualifying “long-time residents” and who buy another principal residence. However, for the first time there will be a dollar cap on residences qualifying for the FTHTC.
FTHTC extended: The FTHTC is extended to apply to a principal residence purchased by the taxpayer before May 1, 2010. The FTHTC also applies to the purchase of a principal residence before July 1, 2010 by any taxpayer who enters into a written binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010.
FTHTC available to higher income taxpayers:. For purchases after November 6th, 2009 the FTHTC phases out for individual taxpayers with modified adjusted gross income (AGI) between $125,000 and $145,000 ($225,000 and $245,000 for joint filers) for the year of purchase (it was $75,000 for Single filers and $150,000 for Joint filers).
FTHTC available for existing long term homeowners: For purchases after November 6th, 2009, any individual (and, if married, the individual's spouse) who has maintained the same principal residence for any 5-consecutive year period during the 8-year period ending on the date of the purchase of their new principal residence qualifies for the FTHTC. The maximum allowable credit for such taxpayers is $6,500 ($3,250 for a married individual filing separately
FTHTC home price limitation: For purchases after November 6th, 2009, the FTHTC cannot be claimed for buying a residence if its purchase price exceeds $800,000. Note that this is a “cliff credit” which means a purchase price that exceeds the $800,000 threshold by even a single dollar will cause the loss of the entire credit.
OTHER NOTABLE CHANGES/ ANTI -ABUSE RULES:
- The taxpayer may elect to treat a home purchase after 2008 as made on Dec. 31 of the calendar year preceding the purchase for purposes of claiming the credit on the prior year's tax return.
- For purchases after November 6th, 2009, the FTHTC can't be claimed unless the taxpayer has attained 18 years of age as of the date of purchase. A taxpayer who is married is treated as meeting the age requirement if the taxpayer or his spouse meets the age requirement.
- For purchases after November 6th, 2009, the FTHTC can't be claimed by a taxpayer if he can be claimed as a dependent by another taxpayer for the tax year of purchase.
- For 2009 tax returns the FTHTC is not allowed unless the taxpayer attaches to their tax return a copy of the settlement statement used to complete the purchase.
- The Act extends the FTHTC for an additional year, and waives recapture provisions, for individuals who are on qualified official extended military duty., as amended by Act Sec. 11(e))
Greg I. Nelson, CPA, MBT
Olsen Thielen CPAs
