First-Time Homebuyer Credit
The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a number of income deductions and credits for tax years 2009 and beyond. One such popular credit is the First-Time Homebuyer Credit. Congress recently passed The Worker, Homeownership and Business Assistance Act of 2009, extending the First-Time Homebuyer Credit and expanding who qualifies. Generally, an $8,000 credit is available to first time homebuyers of a principal residence if the purchase is completed, or a binding contract is entered into, on or before April 30, 2010. If the latter, you must close on the home on or before June 30, 2010. In addition, a reduced credit of $6,500 is available for "long-time" residents who purchase a new home under similar rules.
The IRS has encouraged all eligible homebuyers to take advantage of the first time homebuyer credit but at the same time has cautioned taxpayers to avoid schemes that help ineligible people file false claims for the credit. The IRS is currently investigating a number of cases of potential fraud and is using computer screening tools to flag questionable claims for potential audit. To qualify for the credit the taxpayer must not exceed minimum adjusted gross income limits, must meet minimum age limits, and must not use a dependent to claim the credit. In addition, no credit is available if the purchase price of the new home exceeds $800,000. Other restrictions and conditions may apply. Your CPA or qualified tax preparer should be consulted if you have any questions to ensure your eligibility and to avoid any unnecessary IRS inquiries.
