How to File for the Latest Homebuyer Tax Credit
By Cheri Dohnal
Photo: © Dmitriy Yakovlev - Dreamstime
 The homebuyer tax credit has undergone so many alterations that many people are no longer sure which homes and taxpayers qualify for it. Since it has been extended and expanded for a limited time, it's important that its newest provisions are understood even before the IRS releases the forms to claim it.
Important Tax Credit Updates
The expanded version of the credit is not limited to first-time buyers, although there is still a credit of up to $8,000 offered to first-time buyers. Now there is also a credit for "long-time residents" who buy a new home, and both credits have been extended into 2010.
Information for First-time Buyers
First-time buyers and those who haven't owned a home at any time in the three years prior to purchase have the largest number of options for claiming the credit. Purchases made and closed before November 6, 2009 qualify to be claimed on either an original or amended 2008 tax return, using the 2008 version of IRS Form 5405. If your home purchase closed after November 6, 2009 you must use the 2009 Form 5405 and |
conform to the new guidelines. However, the credit has been extended to binding contracts (including earnest money agreements) entered into by April 30, 2010 and closed by June 30, 2010. Income limits for claiming the full credit have been raised to $225,000 for married taxpayers filing jointly and $125,000 for all other filers, and there is a cap of $800,000 on the purchase price.
Information for Long-time Residents
Long-time residents who buy a replacement main home may now qualify for up to a $6,500 tax credit. To qualify, you must have lived in your former home for at least five consecutive years out of the eight years immediately prior to buying the new home. The purchase may close as late as June 30, 2010 but a binding purchase agreement must be entered into no later than April 30, 2010. Income limits are the same as for first-time buyers. Since this is a new credit, you must use the 2009 or 2010 Form 5405 to claim it. The 2009 version will not be released by the IRS until late December or early January.
Tax Form Details
If you are required to use the 2009 version of Form 5405 for either of these credits, you will not be able to file your tax return electronically because the form will be released too late to include it in 2009 e-file software. The required purchase dates are extended a full year for members of the armed forces and certain diplomatic and intelligence personnel on foreign duty. |
