2009 Tax Credit for Move Up Buyers | FAQs and Program Details

There’s been a lot of hoopla about the extension of the first time home buyer’s tax credit into next year.  What many people are glossing over though, is the expansion portion of the credit.  Effective November 7, 20009 a new credit was put into place for existing home owners that choose to purchase a new or resale home, including some special provisions for military personnel.

Here are details on the new credit, courtesy of the National Association of Realtors:

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?

The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:

1. The price of the home.
2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.

More Tax Credit Information from the National Association of REALTORS:

The Basics: Extended Home Buyer Tax Credit

How to Get: Extended Home Buyer Tax Credit

2009 First-Time Home Buyer Tax Credit

How to Get: 2009 First-Time Home Buyer Tax Credit

Timeline

Getting the Credit

How to Get the Extended Home Buyer Tax Credit

Applying the Credit to Your 2009 or 2010 Return

Determining Your Credit Amount: Form 5405

Bridge Loans: How to Get the Credit Upfront

NAR Tax Credit Resources

Tax Credit Comparison Chart (PDF: 455K)

Home Buyer Tax Credit FAQ (PDF: 596K)

President’s Podcast: Tax Credit Expanded and Extended

Please note that I am not a tax professional.  If you need more specific information about how the tax credit can benefit you or how to file for your credit, please contact your personal tax professional or the Internal Revenue Service.

If you are considering buying a home on the West Bank of New Orleans, please contact the West Bank Living Team and let us tell you how we are different by design, with dedicated buyer and seller agents who work for YOU.  It would be our pleasure to assist you with any of your real estate needs.