New Changes to the Homebuyer's Credit

On November 6, 2009, President Obama signed into law the “Worker, Homeownership, and Business Assistance Act of 2009.” Among other provisions, the Act extends and modifies the First-Time Homebuyer Tax Credit, allowing more people to qualify for a tax credit on home purchases. The highlights of the changes are:

• The credit is extended to purchases of principal residences bought before May 1, 2010.
• The credit is available to those earning more money. For purchases made after November 6, 2009, the credit is available to those buyers with an adjusted gross income of $145,000 ($245,000 for married couples filing a join return). However, buyers with an AGI of more than $125,000 ($225,000 married filing jointly) will receive a reduced amount.
• The Act also allows some existing homeowners to qualify for a “long time resident credit” of up to $6,500 ($3,250 for married individuals filing separately). This credit is available to those buyers who have owned a primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of the new home.

The Act also includes some new limitations for purchases made after November 6, 2009:

• Purchasers must be at least 18 years old on the date of purchase.
• Dependents are not eligible to claim the credit.
• The credit is not available if the purchase price of the home is more than $800,000.
• The credit does not apply if the home is purchased from a person related to the taxpayer  or the taxpayer's spouse.

If you have any questions about these changes or about your qualifications to take advantage of this provision, please contact our office.

(November  15, 2009)

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