Homebuyer
Credit Expanded and Extended
The Worker, Homeownership and Business Assistance Act
of 2009, signed into law on Nov. 6, 2009, extends and expands
the first-time homebuyer credit allowed by previous Acts.
Under the new law, 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.
The new law also:
- Authorizes the credit for long-time homeowners
buying a replacement principal residence.
- Raises the income limitations for homeowners
claiming the credit.
News
release 2009-108 has the details, as do two
new IRS videos in English and Spanish.
Members of the military, Foreign Service and intelligence
community serving outside the U.S. should also be aware
of new
benefits in the law that apply particularly
to them.
Following is general information for first-time homebuyers
who settled on a new home on or before Nov. 6, 2009.
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established
a tax credit for first-time homebuyers that can be
worth up to $7,500. For
homes purchased in 2008, the credit is similar to
a no-interest loan and must
be repaid in 15 equal, annual installments beginning
with the 2010 income tax year.
For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009
expanded the first-time homebuyer credit by increasing
the credit amount to $8,000 for purchases made in
2009 before Dec. 1. However, the new Worker, Homeownership
and Business Assistance Act of 2009 has extended
the deadline. Now, taxpayers who have a binding contract
to purchase a home before May 1, 2010, are eligible
for the credit. Buyers must close on the home before
July 1, 2010. [Added Nov. 12, 2009]
For 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 tax return, due
April 15, 2009, or a 2009 tax return, due April 15,
2010. The credit may not be claimed before the closing
date. But, if the closing occurs after April 15, 2009,
a taxpayer can still claim it on a 2008 tax return
by requesting an extension of time to file or by filing
an amended return. News release 2009-27 has more information
on these options.
General Information
Homebuyers who purchased a home in 2008, 2009 or
2010 may be able to take advantage of the first-time
homebuyer credit. The credit:
- Applies only to homes used as a taxpayer's principal
residence.
- Reduces a taxpayer's tax bill or increases
his or her refund, dollar for dollar.Is fully
refundable, meaning the credit will be paid
out to eligible taxpayers, even if they owe
no tax or the credit is more than the tax
owed.
- The credit is claimed using Form 5405, which you
file with your original or amended tax return.
Questions
and Answers
More information is available in the question
and answer section.
Related Items
IR-2009-83, First-Time Homebuyer Credit
Provides Tax Benefits to 1.4 Million Families to Date
The
American Recovery and Reinvestment Act of 2009: Information
Center
Source: IRS.gov
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