The Worker, Homeownership, and Business Assistance Act of 2009 has extended and expanded the homebuyer tax credit. The key points of the tax credit follow. For more specific questions and for additional information, we urge you to contact your tax advisor.  You may also want to check out information on the IRS Website.

$8000 First Time Buyer Tax Credit

• Sales must take place between January 1, 2009 and June 30, 2010 (with contracts binding prior to April 30, 2010)
• For sales between January 1, 2009 and November 6, 2009, the income limit is $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns
• For sales closing between November 7, 2009 and June 30, 2010, the income limit is $125,000 for single taxpayers and $225,000 for married couples filing joint returns.  The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than $125,000 for single taxpayers and $225,000 for married taxpayers filing a joint return.  
• 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.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
• Home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns
• Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000.
• The home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset.

$6500 Repeat Buyer Tax Credit

• Sales must take place between November 6, 2009 and June 30, 2010 (with contracts binding prior to April 30, 2010)
• The income limit is $125,000 for single taxpayers and $225,000 for married couples filing joint returns. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits.
• A tax credit qualified move-up home buyer (“long-time resident”) is defined by law as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6500.
• Home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns
• Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000.
• The home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset.