When congress extended the 2009 Homebuyer Tax Credit last November, it made some significant changes.
For instance, unlike the earlier credit, this extension has two deadlines. In order to be eligible, a home buyer must be under contract by April 30 and the purchase must close by June 30.
They also changed the income requirements, so if you purchased after November 7 you could qualify with a higher income than if you purchased between January 1 and November 6, 2009.
The extended credit also gives a break to “move-up” buyers – those who have lived in their primary residence for 5 of the past 8 years. The original “first time buyer” credit applies only to those who have not owned their primary residence during the previous 3 years.
This left many wondering why they excluded the people in the middle.
Since the definition of “first time buyer” appears to extend to those who have owned rental property or a vacation property, checking your eligibility with a qualified tax account is a good idea. And, if your income is over $75,000 individually or $150,000 jointly, you should check to see if your purchase date and your income allow you to qualify for the credit – or perhaps for a partial credit.
The next oddity is that you can choose which tax year to use to claim the credit. Even if your purchase doesn’t close until June 30, 2010 you can claim the credit on your 2009 tax return. If this is your plan, you can either file for an extension and wait to send in your tax return, or you can file an amended return to claim the credit.
One thing you cannot do if you’re claiming either of the homebuyer credits is file electronically. While tax preparation software has been updated to allow for the credit, form 5405 has not been formatted and approved by the IRS for e-filing. That means you can use the software to print your report, but you’ll need to put it in the mail.
One thing is certain – if you plan to purchase in time to claim this credit, you need to be looking for a home right now. In some markets buyers are finding it necessary to offer on several homes before having an offer accepted. And, buyers who are attempting to purchase short sales are often finding that it takes much more than 60 days to close.
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