2009-2010 Homebuyer Tax Credit Extension

On Nov. 6th, President Obama signed into legislation the extension of the Homebuyer Tax Credit.

Under the new provisions, both first-time and existing homebuyers will be able to take advantage of the tax credit.

The biggest benefit of the extension is that homebuyers now have an extra six months to sign a contract on a home. The deadline for a signed purchase agreement has been extended to April 30, 2010.  Purchasers then have until June 30, 2010 to close on the home.

The law defines a "first-time" homebuyer as a person not owning an interest in a principal residence any time in the last three years. For married couples, neither spouse can have owned a principal residence in the last three years.

An "existing" homebuyer is defined as a person who is buying a new home and selling a principal residence, where they have lived in that residence consecutively for the last five out of eight years.

The amount of the tax credit for first-time homebuyers will be $8,000, while existing homebuyers will receive $6,500.

To qualify, the home purchased must be less than $800,000. Also, persons filing their taxes as "single" must not accumulate more than $125,000 in annual income. For persons filing jointly, the income cap is $225,000.

The new extension also added a provision for an "Anti-Fraud Rule," which requires all tax filers claiming this credit to include a copy of the purchase agreement to their next year's tax return.

The old provisions  of First-Time Homebuyer Tax Credit will still remain in effect for homes closing by Nov. 30, and the new provisions will become effective on homes closing starting on Dec. 1.

For a summary of all the new provisions, click here.

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