By Johnny Jackson
Would-be homeowners will have an extended opportunity to benefit from the federal First-Time Homebuyers Credit, according to officials with the Internal Revenue Service.
The new law, which went into effect Nov. 6, extends the first-time homebuyer credit by five months, and expands the eligibility requirements for purchasers, said IRS Spokesman Mark Green.
Green said the Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. It, in effect, allows a buyer who enters into a binding contract by April 30, 2010, time to settle on the purchase -- until June 30, 2010.
The credit, he continued, will be available to members of the military and certain federal employees serving outside the United States. They will have an additional year to buy a principal residence within the United States and will have to buy or enter into a binding contract to purchase a home by April 30, 2011, and settle on the purchase by June 30, 2011.
"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," Green said.
Homeowners will receive as much as $8,000 cash, according to the new law, and will not have to pay the credit back as long as they continue ownership of the home for at least three years.
Green added that the new law also provides a "long-time resident" credit of up to $6,500. In order to qualify for the long-time resident credit, 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 as a primary residence.
"The new credit is based on the value of the home and taxpayer income, and is not taxable," Green said. "It's a credit versus a deduction."
The new law also raises the income limits for people who purchase homes after Nov. 6, 2009, Green added. 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.
The law stipulates that, for homes purchased prior to Nov. 7, 2009, the existing adjusted gross income limits will remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers, Green said.
Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. However, those with higher incomes do not qualify.
"In most cases, whether you have a tax liability or not, you still get up to $8,000 back as a refund," Green added. "However, if you owe money, we'd subtract out the difference."
Green warns that no credit is available if the purchase price of a home is more than $800,000. Dependents and those younger than 18 years of age at the time of purchase are also ineligible for a credit.
For purchases made in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns. Green said new homebuyers should visit the IRS web site to learn how to file for the credit.
On the net:
Internal Revenue Service: www.irs.gov