Homebuyers $8,000 Tax Credit Extended through April 30, 2010

On November 6, 2009, President Obama signed into law an extension of the $8,000 first-time homebuyers tax credit until April 30, 2010. Binding contracts for the purchase of a principal residence signed by April 30 must close by June 30 to qualify in order for the first-time homebuyer to qualify for the credit. For qualifying purchases in 2010, taxpayers will have the option of claiming the credit on either their 2009 or 2010 return.

The new law added several new provisions that apply to persons purchasing homes on or after November 7, 2009:

    * Homebuyers with higher incomes can now qualify for the credit for homes purchased after November 6, 2009. Income limits have been increased to $125,000 for individuals and $225,000 for couples filing jointly. These income limits were formerly $75,000 and $150,000, respectively. The credit phases out for individual taxpayers with a modified adjusted gross income between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers.
    * The new law adds a $6,500 credit for long-time homeowners who want to trade up, that is, current home owners who have lived in their home for five of the past eight years and who buy a replacement principal residence by April 30, 2010.
    * Qualifying home purchase prices must not exceed $800,000.
    * The extended tax credit for first-time homebuyers remains at $8,000 and requires that the buyer have not owned a home in the past three years, as before.
    * Purchasers claiming the credit will need to attach documentation of the transaction to their tax returns in order to help combat the tax credit fraud that has been experienced by the IRS to date.

Extended Homebuyer Tax Credit Resources

For additional information, the following resources – which can be expected to be updated frequently over the upcoming days and weeks – offer examples of fact situations, filing options and other details:

    * NAR The Basics: Extended Home Buyer Tax Credit 2009/2010:

How to claim the first time home buyer tax credit.  The tax credit can be claimed on Line 69 of Form 1040.

Let me know if you have any questions or want to focus your search to speed up the selection process.

If you know of any first time home buyers, feel free to pass this information along to them.

 Mortgage Banking/Finance - General Finance
QUESTION:
Re: Land Contracts and the first-time homebuyer tax credit.

ANSWER:

Here is the new addition from the IRS on their Q and A page at http://www.irs.gov/newsroom/article/0,,id=206291,00.html.

Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?

A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

READ MORE ABOUT IT:
For more information about the homebuyer tax credit visit the WRA’s new Wisconsin Homebuyer Microsite @ http://www.wisconsinhomebuyer.org/taxcredit.html and the IRS information @ http://www.irs.gov/newsroom/article/0,,id=206291,00.html.
http://www.irs.gov/newsroom/article/0%2C%2Cid%3D206291%2C00.html