Homebuyer Credit Extended

Thinking of buying a new home? It’s still a good time. The Senate voted to extend the First-Time Homebuyer Tax Credit AND expand the credit to some existing homeowners.

The financial stimulus package passed in February provided for a credit for first time homebuyers that was set to expire December 1, 2009. New legislation has extended the existing $8,000 tax credit and expanded it to allow up to $6,500 in tax credits for existing homeowners who plan to purchase a new home. Both credits do not have to be repaid, and they are refundable - which means that a buyer would get the full amount even if the credit exceeds the amount they paid in.

Stipulations do exist, however. Existing homeowners must have lived in their current home for five consecutive years within the last eight years. Additionally, the credit is limited to the purchase of principal homes (no second homes or vacation homes) costing $800,000 or less. Finally, the credit is reduced for individuals with annual incomes over $125,000 and for joint filers with incomes above $225,000.

Purchase agreements must be signed by April 30, 2010 and closing must be completed by June 30, 2010 to qualify. The deadline is extended another year for members of the military who have served outside the U.S. for at least 90 days between January 1, 2009 and May 1, 2010.

For further questions on eligibility and how to claim the credit, contact our office.

--LeAnn Carlson is the Audit Manager for Cook & Associates, a firm offering a full range of accounting, tax, and auditing services from offices in San Marcos and San Antonio, TX