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Information from
http://www.irs.gov
New
Legislation
New legislation, the Worker, Homeownership and Business
Assistance Act of 2009, which was signed into law on Nov. 6,
2009, extends and expands the first-time homebuyer credit
allowed by previous Acts. The new law:
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Extends
deadlines for purchasing and closing on a home.
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Authorizes the credit for long-time homeowners buying a
replacement principal residence.
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Raises the
income limitations for homeowners claiming the credit.
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.
For the first time, long-time homeowners who buy a
replacement principal residence may also claim a homebuyer
credit of up to $6,500 (up to $3,250 for a married
individual filing separately). They must have lived in the
same principal residence for any five-consecutive year
period during the eight-year period that ended on the date
the replacement home is purchased.
People with higher incomes can now qualify for the credit.
The new law raises the income limits for homes purchased
after Nov. 6, 2009. The credit phases out for individual
taxpayers with modified adjusted gross income (MAGI) between
$125,000 and $145,000 or between $225,000 and $245,000 for
joint filers. The existing MAGI phase-outs of $75,000 to
$95,000 or $150,000 to $170,000 for joint filers still apply
to purchases on or before Nov. 6, 2009.
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:
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Applies only
to homes used as a taxpayer's principal residence.
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Reduces a
taxpayer's tax bill or increases his or her refund,
dollar for dollar.
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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.
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.
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.
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