President Obama Signs Tax Credit Extension and Expansion

President Obama signs a bill.On November 6, President Obama signed H.R.3548: Worker, Homeownership, and Business Assistance Act of 2009. It extends and expands the homebuyer tax credit.  Here are the tax credit highlights:

For First-Time Buyers

  • The Act extends the tax credit of 10%, up to a maximum of $8,000, for qualified first-time home buyers purchasing a principal residence. The tax credit now applies to sales occurring on or after January 1, 2009, and on or before June 30, 2010.  A binding sales contract must be signed no later than April 30, 2010.
  • The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
  • For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns. 
  • Above these limits, there is a $20,000 phase-out range offering partial tax credits.
  • The Act defines a first-time home buyer is as one who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
  • The tax credit applies only to homes with a purchase price up to $800,000.

For Move-Up (Repeat) Buyers

  • The Act establishes a tax credit of 10%, up to a maximum of $6,500, for qualified move-up buyers (existing home owners) purchasing a principal residence. The tax credit applies to sales occurring on or after November 6, 2009, and on or before June 30, 2010.  A binding sales contract must be signed no later than April 30, 2010.
  • For move-up home buyers, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.  Above these limits, there is a $20,000 phase-out range offering partial tax credits.
  • The Act defines a move-up buyer (“long-time resident”) as a home owner who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
  • The tax credit applies only to homes with a purchase price up to $800,000.

Everyone’s situation is different, so be sure to consult your tax preparer or financial adviser about how the various provisions of this Act may apply to you.

For further details, see the excellent FAQ pages by the National Association of Home Builders (NAHB).

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About Ron Cohen

Retired, I've spent the past few years describing "the life of a pond in words and photographs:" http://atmywindow.com/. Recently I've created a new photo blog devoted to "people and places along my way:" http://www.roncohen.com.
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