FIRST – TIME HOMEBUYER CREDIT

First-time homebuyers may be able to take advantage of a tax credit for homes purchased in 2009.

 An eligible taxpayer must buy, or enter into a binding contract to buy a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.

For a home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer’s main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 amended tax return, or a 2009 tax return, due April 15, 2010. The credit may not be claimed before the closing date.

 Homebuyer is extended

Several restrictions apply to homes purchased after November 6, 2009.

·    Purchasers must attach a properly executed             settlement statement to their return

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

·        A dependent is not eligible for the credit.

·        The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return.

For sales occurring after November 6, 2009, income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

For the first time, long-time homeowners of the same main home who buy a new replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

Information provided by Internal Revenue Service