As part of the Workers Homeowner Business Assistance Act that Congress passed this month, the Homebuyer Tax Credit that was originally enacted in February and scheduled to end November 30th was extended and expanded. The significant changes to the credit program in the new law are as follows:
- The $8,000 credit is extended to purchases of a primary residence that settle by June 30, 2010 and are subject to a written binding contract entered into before May 1, 2010. Effectively, this is a five-month extension of the credit (to April 30, 2010). As before, this credit is available to purchasers who did not own a home for the past three years.
- Income limits for homebuyers who are allowed the credit are increased to $125,000 for singles and $225,000 for married filing jointly. The previous limits were $75,000 and $150,000.
- Individuals and couples who have used their current home as a principal residence for five of the previous eight years are allowed a $6,500 credit if they purchase a new principal residence. Note that this new credit does not require the owner to sell the previous principal residence; it could be retained as a rental or vacation home.
- No credit is allowed if the purchase price of the new residence exceeds $800,000.
- As in prior law, no credit is allowed if the home is purchased from a related party.
- All of these changes are effective as of November 6, 2009.
To learn how you may benefit from the Homebuyer Tax Credit extension, call the Aronson & Company Tax Services Group at 301.231.6200.