Following are the latest details available on the proposed extension and expansion of first time home buyer tax credit extension; now including a move-up buyers tax incentive as of 11/4/09. This measure has been passed by the Senate, now it's up to the House.
- The tax credit would be $8,000 for first-time home buyers and $6,500 for move-up buyers (from December 1, 2009 to April 30, 2010).
- Move-up buyers will be eligible, so long as the home they are leaving has been used as their principal residence for 5 years or more.
- The tax credit would sunset on April 30, 2010. However, there would a binding contract rule that will permit those with contracts as of April 30th to qualify for the credit so long as they complete the transaction within 60 days. This means the transaction must close by June 30, 2010.
- The income limits for both first-time home buyers and move-up buyers would be $125,000 for single return and $225,000 joint return.
- Cost of the home may not exceed $800,000 to be eligible.— For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return.
- Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date.
- The amendment includes a military waiver provision, meaning the recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the home buyer tax credit.
- The amendment also includes anti-fraud language that provides math authority to the IRS to do greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older as well as requiring a HUD-1 settlement statement to be attached when claiming the credit.
- The maximum move up home purchase would be $800,000.
This is certainly good news for the housing industry. Increased home sales will add to property and sales tax revenues to local governments. If approved, this measure would also be doubly beneficial for both buyers and sellers in that this comes at a time when interest rates can be found around 5%.
Check back here for the latest details on this blog. When there are relevant updates, we'll post them as soon as we receive them.