First-time Homeowner Tax Credit Extended with Important Changes
On November 6, 2009, President Obama signed into law the Worker, Homeownership and Business Assistance Act of 2009, which includes a provision to extend the first-time homebuyer tax credit originally created in July 2008 with the Housing and Economic Recovery Act. This extension applies for new homes purchased before May 1, 2010; for members of the military whose duties have taken them overseas, the credit extends until May of 2011.
The new legislation includes some important changes for those buying a home after it was signed into law. These changes include:
• Higher income limits now apply. The credit is reduced if your modified adjusted gross income (MAGI) exceeds $125,000 ($225,000 if married filing a joint return) and is completely eliminated if your MAGI is $145,000 ($245,000 if married filing a joint return).
• A credit of up to $8,000 will still apply to qualifying first-time buyers, and a smaller credit of up to $6,500 will now apply to families that have lived in their homes for at least five years and wish to purchase a new home.
• If you (and your spouse, if you're married) have maintained the same principal residence for at least five consecutive years in the eight year period ending at the time you purchase a new principal residence, you could qualify for a credit of up to $6,500 ($3,250 if you're married and file separately).
For more information and to decide if taking advantage of these new rules is for you, visit the White House’s Fact Sheet on the Worker, Homeownership and Business Assistance Act or the U.S. Department of Housing and Urban Development’s Web site for details on the original Housing and Economic Recovery Act.
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