Homebuyer Credit Expanded and Extended (Part 1)

Homebuyer Credit Expanded and Extended (Part 1)

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.

The new law extends deadlines for purchasing and closing on a home, authorizes the credit for long-time homeowners buying a replacement principal residence and raises the income limitations for homeowners claiming the credit.

The first-time homebuyer credit is a tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period.

The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit.

The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return.

If you have a specific question regarding this article, as a public service, and at no cost to you, I invite you to call me with your question. Also at no charge, I am happy provide you with a second opinion on your return that was done by another paid preparer.

Call me and I will be happy to explain my “CPA Quality Tax Preparation at H&R Block Rates”™, my many discounts including the Virtual Tax Office eMail-Order Tax Return Discount of $50 and how you can, in general, minimize your tax preparation fees regardless of who prepares your tax returns. To read previously published tax articles go to www.danghazel.com. You can contact me at info@danghazel.com or call me at 305-451-4224 or 540-825-2771.

Thank you for your interest in reading my tax column. This column is offered as a public service with the understanding that each person's tax situation is different; that you should consult your CPA before taking any action based upon comments made in this article.