Changes to the Homebuyer Credit

Amendments offer credits to both new and existing homebuyers
by Jennifer L. Harrison

• Home must be purchased between January 1, 2009 and April 30, 2010. If a binding contract is signed by April 30, 2010, a purchase completed by June 30, 2010 is eligible as well.
• If the home is purchased after November 6, 2009, the income limits are $125,000 for single taxpayers and $225,000 for married taxpayers (was originally $75,000 and $150,000). Therefore, if your income is over the threshold, your credit will be reduced, and ultimately eliminated for income over $145,000 and $245,000.
• The buyer cannot have owned a home within the past 3 years; the IRS tests spouse ownership too.
• The credit is equal to 10% of purchase price, up to $8,000.
• Homes priced over $800,000 do not qualify.
• Home cannot be purchased from a family member (parents, child, etc).
• The credit is refundable and can be claimed even if there is no tax liability.
• Taxpayers can choose the year to claim credit if income is high in one year.

Existing Home Buyers

• Existing buyers have the same time and income limitations for purchasing a home and claiming credit as new home buyers.
• The taxpayer must have lived in the same home for 5 consecutive years during the past 8 years; the law tests ownership and residency of spouses.
• The new home does not have to be an upgrade. It can be a home of equal or lesser value than the current home.
• The credit is equal to 10% of purchase price, up to $6,500.
• Homes over $800,000 do not qualify for the credit.
• The credit is refundable.
• The home cannot be purchased from family members.

Many people will potentially benefit from the new bill. Please contact your HLB Gross Collins, P.C. advisor if you would like more information regarding the home buyer credit and to see if you can take advantage of this credit.