First-Time Homebuyers Credit for 2009 Filing Season

Refundable First-time Homebuyer Credit.

Individuals who purchase a principal residence from an unrelated party at fair market value before May 1, 2010, and who did not own a principal residence during the 3-year period ending on the date of purchase may claim a refundable tax credit for 10% of the purchase price.

The maximum credit is $8,000 ($4,000 Married Filing Separately). In addition, individuals who purchase a home after Nov. 6, 2009, and who owned a home they used as their main home for at least 5 consecutive years during the 8-year period ending on the date they purchase a subsequent residence may now claim the credit.

The credit for these individuals is equal to 10% of the purchase price with a maximum credit of $6,500 ($3,250 Married Filing Separately). A home purchased under a written binding contract entered into by April 30, 2010, qualifies for the credit if the closing of the purchase occurs before July 1, 2010. Members of the Armed Forces, the Foreign Service, and the intelligence community serving on qualified official extended duty outside the United States for at least 90 days during the period from Jan. 1, 2009, through April 30, 2010, can claim the credit for a home purchased before May 1, 2011 (before July 1, 2011, for a home purchased under a written binding contract entered into by April 30, 2011, if the closing of the purchase occurs before July 1, 2011.)

In addition, the recapture requirement is waived for all members of the Armed Forces, the Foreign Service and the intelligence community serving on qualified official extended duty for at least 90 days, regardless of where they are stationed, who sell their homes after 2009 in connection with government orders.

For homes purchased before Nov. 7, 2009, the credit is reduced when modified adjusted gross income (AGI) exceeds $75,000 ($150,000 if Married Filing Jointly) and is eliminated when modified AGI reaches $95,000 ($190,000 if Married Filing Jointly). For homes purchased after Nov. 6, 2009, the credit is reduced when modified adjusted gross income (AGI) exceeds $125,000 ($225,000 if Married Filing Jointly) and is eliminated when modified AGI reaches $145,000 ($245,000 if Married Filing Jointly). For homes purchased after Nov. 6, 2009, no credit is allowed

if the purchase price exceeds $800,000

for a home purchased by an individual who is eligible to be claimed as a dependent by another taxpayer

for a purchaser who is less than 18 years of age.

A married taxpayer is treated as meeting the age requirement if either the taxpayer or the taxpayer's spouse is at least age 18 on the date of purchase. For credits claimed on a 2009 or 2010 return, you must attach to your return a properly executed copy of the settlement statement used to complete the purchase. The extended credit must be repaid if the home is sold or ceases to be your personal residence within 36 months of the purchase, unless an exception applies.

For homes purchased in 2009 or 2010, individuals may claim the credit on the return for the year in which the residence is purchased or on an amended return for the year before that year.