Peoples Home Equity, Inc.

Questions About the Updated Home Buyer Tax Credit? We’ve Got Answers.

About the Home Buyer Tax Credit

The Worker, Homeownership, and Business Assistance Act of 2009 has extended and expanded the home buyer tax credit. Previously, the tax credit only applied to first-time homebuyers at up to $8,000. However, a credit for qualified repeat buyers has been added for up to $6,500. The deadline to qualify has also been extended to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

Who is eligible to claim the tax credits?

• First-time buyers purchasing a principal residence are eligible for the (up to) $8,000 tax credit.
• Repeat buyers who have lived in their principal residence for five or more years, and plan to make the home their new principal residence are eligible for the (up to) $6,500 tax credit.

The sale must occur on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify for either credit.

For both credits, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.

Persons who are claimed as dependents by other taxpayers or who are under age 18 cannot receive the tax credit.

What is the definition of a first-time home buyer?

The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

Reprinted from http://www.federalhousingtaxcredit.com/faq1.php