Housing Stimulus Expanded

Originally part of the American Recovery and Reinvestment Act enacted In February of 2009, the First-Time Home Buyer tax credit was extended and expanded less than a month before it was set to expire, thus making the original expiration date invalid. All new pieces of the legislation took effect Nov. 7, 2009 when President Obama signed the bill.

The new credit extends the $8,000 credit until April 30, 2010 with an allowance for an additional 60 days to close as long as a binding contract is in place by the deadline. Additionally, the same legislation provides for a second credit for current homeowners who have owned their primary residence for 5 consecutive years out of the past 8. This credit is up to $6,500 and the deadline is also April 30, 2010.

Who Qualifies?

First-Time Home Buyer - $8,000 (or 10% of purchase price, whichever is less) To qualify, the buyer must:

• Not have owned their primary residence in the previous 3-year period ending on the date of
  purchase.
• Have modified adjusted gross income (MAGI) of $125,000 for an individual or $225,000 for
  married couples.
• Purchaser must be 18 and cannot be claimed as a dependant on someone else's federal tax return
• If married, both purchasers must qualify as first-time home buyers

And the qualifying home purchased must:

• Not have a price tag in excess of $800,000
• Be maintained as the buyer's primary residence for the next 3 years (or it must be repaid)
• Not be purchased from a family member (blood relative)
  

Current Homeowner - $6,500 (or 10% of purchase price, whichever is less)
To qualify, the buyer must:

• Have owned their primary residence for 5 consecutive years during the previous 8 year period prior to new purchase
• Have modified adjusted gross incomes (MAGI) of $125,000 for an individual or $225,000 for married couples
• Purchaser must be 18 and cannot be claimed as a dependant on someone else's return
• If married, both spouses must qualify as eligible

And the qualifying home purchased must:

• Not have a price tag in excess of $800,000
• Be maintained as the buyer's primary residence for the next 3 years (or it must be repaid)
• Not be purchased from a family member (blood relative)
  

How do you claim the credit?

Homebuyers can claim either tax credit when filing 2009 federal income tax returns due on April 15, 2010. As a refundable credit, It will first reduce any federal income tax owed for 2009 and then any amount left will be returned to the buyer as an ordinary tax refund.

Home buyers may also amend their previous year's tax return to claim the credit; meaning a claimant may amend the 2009 tax return to claim the credit for a home purchased in 2010. In most cases, this would allow the individual to receive the credit sooner than waiting to file with the tax return for the calendar year of your purchase.

In an effort to prevent fraudulent claims, all qualifying purchases made after November 6, 2009 require the claimant to attach the HUO-l settlement statement when filing for the credit.

One additional step a home buyer may take to receive the credit sooner would be to decrease their federal tax withheld from their paycheck through the rest of the year. Doing this will allow you to increase your take-home pay by the amount of the anticipated credit.