Expanded Tax Credit
A tax credit of up to $8,000 for first time buyers and up to $6,500 for qualified repeat buyers is still available. You are considered a first time buyer if you have not owned a home in the last 3 years. Repeat buyers need to have owned a home for 5 consecutive years out of the prior 8 years. The tax credit is based on up to 10% of the purchase price up to the limit of $8,000 for first time buyers and $6,500 for repeat buyers.
All buyers need to be entered into a binding sales contract on or before April 30, 2010 and have the closing on or before June 30, 2010. I would advise people to avoid the rush and buy now! Income limits have also been increased for home purchases made after November 6, 2009. The new limits are $125,ooo for individuals and $225,000 for married couples filing jointly.
Homes priced at $800,000 and above do not qualify for any tax credits. People who are claimed as dependents by another tax payer and those under 18 years old do not qualify. Homes purchased from relatives or your spouses relatives also do not qualify for the tax credit. The IRS defines relatives as ancestors such as parent, grandparent, etc. and also lineal descendents such as child, grandchild, etc. and spouses. Married couples may not claim the first time buyer credit if either spouse has owned a home in the last 3 years. However they may qualify for the repeat home buyer tax credit.
There are also extended tax credit benefits that apply to members of the military, the foreign service, and the intelligence community.
These tax credits never have to be repaid unless the home is sold or ceases to be used as the home buyers principal residence within 3 years after the original purchase.
The American Recovery and Reinvestment Act of 2009