2009 First-Time Homebuyers Credit Confusion

Now that we've reviewed the 2008 credit, let's take a look at the 2009 credit, it is by far the better of the two credits.

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

First-time homebuyers who purchase a home in 2009 can claim the credit on either a 2008 tax return, due April 15, 2009, or a 2009 tax return, due April 15, 2010. If you purchased your home within the 2008 dates, you can amend your 2008 return to claim the 2009 credit but you will have to pay back $500 of the money since the home was purchased in 2008. The remaining $7,500 does not have to be paid back. The $500 payback amount will be applied to your 2009 tax return when you file in 2010.

The credit may not be claimed before the closing date. But, if the closing occurs after April 15, 2009, a taxpayer can still claim it on a 2008 tax return by requesting an extension of time to file or by filing an amended return. News release 2009-27 has more information on these options.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before Dec. 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

Basic information
Homes purchased in 2008
Homes purchased in 2009
Scenarios
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First-Time Homebuyer Credit
IRS Information Related to the American Recovery and Reinvestment Act of 2009