Extended Tax Credit Information For Austin Area First Time Home Buyers and Move Up Buyers
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- • Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- • Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Who Qualifies for the Extended Credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
If you purchased a home between January 1, 2009 and November 6, 2009, you will fall under the original tax credit guidelines.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer's Credit Amount Determined?
Each home buyer’s tax credit is determined by tow additional factors:
- The price of the home.
- The buyer's income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you purchased a home between January 1, 2009 and November 6, 2009, you would fall under the original tax credit guidelines.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Revised Tax Credit Comparison Chart
|
FEATURE |
Jan. 1 – Nov. 30, 2009 Rules
As Enacted February 2009 |
Nov. 7 – Apr. 30, 2010 Rules
As Enacted November 2009 |
|
First-time Buyer –
Amount of Credit |
$8,000 ($4,000 married
filing separate) |
$8,000 ($4,000 married
filing separate) |
|
First-time Buyer –
Definition for Eligibility |
May not have had an
interest in a principal
residence for 3 years
prior to purchase |
Same |
|
Current Homeowner –
Amount of Credit |
No Provision |
$6,500 ($3,250 married
filing separate) |
|
Effective Date –
Current Owner |
No Provision |
November 7, 2009 |
|
Current Homeowner –
Definition for Eligibility |
No Provision |
Must have used the
home sold or being sold
as a principal residence
consecutively for 5 of the
previous 8 years |
|
Termination of Credit |
Purchases after
November 30, 2009.
(Becomes April 30, 2010
on November 7, 2009) |
Purchases after
April 30, 2010 |
|
Binding Contract Rule |
None |
So long as a written
binding contract to
purchase is in effect
on April 30, 2010, the
purchaser will have until
July 1, 2010 to close |
|
Income Limits
(Note: Increased
income limits are
effective as of
November 7, 2009) |
$75,000 – single
$150,000 – married
Additional $20,000
phase out |
$125,000 – single
$225,000 – married
Additional $20,000
phase out |
|
Limitation on Cost of
Purchased Home |
None |
$800,000
November 7, 2009 |
|
Purchase by a
Dependent |
No Provision |
Ineligible
November 7, 2009 |
|
Anti-fraud Rule |
None |
Purchaser must attach
documentation of
purchase to tax return |
How to Get the Extended Home Buyer Tax Credit
You’ve decided to purchase a home and take advantage of the Extended Home Buyer Tax Credit. Here's what you have to do to get your benefit:
- Close on your home purchase between November 7, 2009 and April 30, 2010, or have a binding written contract by April 30, 2010 and close by July 1, 2010.
- Decide whether to:
- apply the credit to your 2009 tax return, filed on or before April 15, 2010;
- file an amended 2009 return; or,
- apply the credit on your 2010 return, filed on or before April 15, 2011.
- Attach documentation of purchase to your return.
When to Apply the Credit
Buyers purchasing homes on or before December 31, 2009 may claim the credit on their 2009 tax returns.
Buyers purchasing in 2010 will have the option to:
- Claim the credit on their 2009 return, even if the purchase is completed after December 31, 2009;
- File an amended return for 2009 if their purchase is completed after April 15, 2010; or,
- Claim the credit on their 2010 tax returns.
Applying the Credit to Your 2009 Taxes
You will need to do three things to claim the credit on your 2009 tax return:
- Fill out Form 5405 to determine the amount of your available credit;
- Apply the credit when you file your 2009 tax return or file an amended return;
- Attach documentation of purchase to your return or amended return.
IRS Tax Credit Resources
Important Facts: Extended Home Buyer Tax Credit
Extended Home Buyer Tax Credit Information
Tax Credit Form (5405) (PDF:257KB)
2008 Home Buyer Tax Credit FAQ
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