January 2010

Homebuyer Credits
By Roger Maag

        A new law that went into effect November 6, 2009 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.

        The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from November 30, 2009 to 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 maximum credit amount remains at $8,000 for a first-time homebuyer—that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.

        The new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as first-time homebuyers. To qualify, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home.

        For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.

        The new law raises the income limits for people who purchase home after November 6, 2009. 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 November 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.

        Several new restrictions on purchases that occur after November 6, 2009 go into effect with the new law:

            • Dependents are not eligible to claim the credit,

            • No credit is available if the purchase price of a home is more than $800,000.

            • A purchaser must be at least 18 years of age on the date of purchase.

        If you would like additional information regarding the Homebuyers Credit, please contract our office.