Modification to the First-Time Homebuyer Credit
Last year Congress implemented a tax credit giving first-time homebuyers up to a $7,500 credit for buying a home between April 9, 2008 and June 30, 2009. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full credit. The credit was unusual in that, unlike other federal tax credits, the credit for first-time homebuyers had to be paid back to the government ratably over a period of fifteen years (or earlier if the house was sold).
As part of the federal stimulus package enacted in February, Congress modified the first-time homebuyer credit by extending it from June 30, 2009 to homes purchased before December 1, 2009. For homes purchased on or after January 1, 2009, the maximum amount of the credit is increased to $8,000 and the repayment requirement is waived unless the home is sold or ceases to be the taxpayer’s (or the taxpayer’s spouse’s) principal residence in the first thirty-six months after the purchase date, in which case the amount of the credit must be repaid.
For purposes of the credit, a first-time homebuyer is an individual (and his spouse, if married) who has not owned another principal residence in the United States during the three year period before purchasing the home. Thus, the home that is purchased need not necessarily be the taxpayer’s “first home”.
First-time homebuyers who purchase a home in 2009 may receive the benefit of the credit by claiming the credit on their 2008 or 2009 federal income tax return. Eligible taxpayers may amend their 2008 income tax return if they purchased a home in 2009 but failed to take the credit on their 2008 return this spring. This option allows homebuyers to get the money in their pockets now as opposed to waiting another year and claiming the tax credit in the spring of 2010 when their 2009 federal income tax return is prepared and filed.
Like other tax laws, there are a number of exceptions that apply to the application of the credit. If you have questions about the application of the first-time homebuyer credit, please contact Andy Weisenberger at aww@santen-hughes.com.