It looks as though the $8,000 tax credit for first-time home buyers, which was scheduled to expire November 30, will be extended.
The tax-credit will also be expanded to those buyers who have lived in their residence for more than 5 years and are purchasing a new residence.
Additional details of the plan:
- Income limits have been increased. The credit is now available to individuals earning $125,000 and couples earning $250,000 (from previous limits of $75,000 for individuals and $150,000 for couples)
- To be eligible, properties must be in contract by April 30, 2010 with closing to take place by June 30, 2010
- For "move up" buyers who previously own a home, the tax credit will be limited to $6,500
Here is the CAR (California Association of Realtors) full explanation on the tax credit:
H.R. 3548 provides both for the extension of the first-time homebuyer tax credit and expansion of it to qualified non-first-time buyers as well. A few of the provisions of this new law include the following:
(1) Both the $8,000 first-time homebuyer tax credit and the $6,500 tax credit for “move-up” buyers (see 4 below) would sunset on April 30, 2010. However, purchasers who have binding contracts as of April 30, 2010 (before May 1, 2010), would still qualify for the credit as long as they complete the transaction within 60 days (or June 30, 2010).
(2) The amendment establishes income limits of $125,000 for an individual or $225,000 for a couple for both credits.
(3) The cost of the home being purchased cannot exceed $800,000 for both categories in order to be eligible for the credit.
(4) “Move up” buyers (an individual or his/her spouse, if married) are qualified if he/she “has owned and used the same residence as such individual's principal residence for any 5-consecutive-year period during the 8-year period ending on the date of the purchase of a subsequent principal residence.”
For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return. Homebuyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date. However, this recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the homebuyer tax credit.
The amendment also includes anti-fraud language that gives the IRS the authority to do greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older and requires a HUD-1 settlement statement to be attached when claiming the credit.