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2009 EXTENDED Federal Tax Credit for First-Time Homebuyers
Internal Revenue Service
www.irs.gov

Program Overview

2009 EXTENDED Federal Tax Credit for First-Time Homebuyers is a tax credit of up to $8,000 available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase. The credit does not require repayment. Most of the mechanics of the credit will be the same as under the 2008 rules: the credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser. That is, if your total tax liability in the given year is less than $8,000, the IRS will send a refund for the balance. Property must be located in the United States.

Who is eligible for this program?

You are not eligible for this tax credit if: You buy your home from a close relative (this includes your spouse, parent, grandparent, child or grandchild); you stop using your home as your main home; you sell your home before the end of three years; and/or you are a nonresident alien. Dependents are not eligible to claim the credit. A purchaser must be at least 18 years of age on the date of purchase. The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify. For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify. Household Income Limit: $ MAGI $125,000/single; $225,000/filing jointly Is this program for first time buyers only? Yes

Property Eligibility Requirements

The sales price cannot exceed $ 800000. Allowable property types: Condo, single family detached, co-op, townhouse or something similar. Vacation homes and rental properties are not eligible.

Benefit Details

For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns. A taxpayer who purchases a home after Nov. 6 must use the latest version of Form 5405, First-Time Homebuyer Credit, to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return. A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405. Up to an $8,000 tax credit. Benefit: The tax credit is for 10% of the home purchase price, up to $8,000 (or $4,000 for married individuals filing separately). Homebuyer Counseling / Education Required: No Owner Occupancy Required: Yes Other Program Comments: For new construction, the “purchase date” is the date you occupy the home. Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

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