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Congress Extends $8000 Homebuyer Tax Credit, Adds New $6500 Credit

Written by Nickel - 48 Comments

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This just in… The House of Representatives has voted to extend — and expand — the first time homebuyer tax credit.

Extending the $8000 credit, adding a $6500 credit

According to the NY Times:

The bill extends an $8,000 tax credit for first-time home buyers that was due to expire on Nov. 30, making it available to those who have a contract before May 1 on a primary residence priced at up to $800,000. The bill also creates a new credit of up to $6,500 for existing homeowners who buy a new residence if they have lived in their current one for at least five of the last eight years.

The income limits for the homebuyer tax credit are also going up, from $75k/$150k for individuals/couples to $125k/$225k. Beyond that, the credit phases out. This extension/expansion is projected to cost nearly $11B.


Extending unemployment benefits

This bill also extends unemployment benefits, as follows:

The measure [also] provides up to 14 weeks of additional assistance to unemployed people who have exhausted their state and federal benefits, but up to 20 additional weeks to those in about 26 states with unemployment rates exceeding 8.5 percent.

The President is expected to sign this bill into law as early as tomorrow (Friday). Also if you’re in the market for a mortgage, you can compare current mortgage rates here.

Thoughts?

Source: NY Times

Published on November 5th, 2009 - 48 Comments
Filed under: Taxes

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Comments (scroll down to add your own):

  1. I’m sure it will be signed tomorrow. Can’t say I think it’s a good idea adding expenditure upon expenditure – although I’m sure it’ll be good for blog traffic! 🙂

    Comment by Anonymous — Nov 5th 2009 @ 10:08 pm
  2. So does the new credit follow the same rules as the old credit? Just that it’s for people who bought homes after May 1?

    Comment by Anonymous — Nov 5th 2009 @ 10:25 pm
  3. @Eric

    It basically follows the original however two notable differences are:

    – It has a credit of up to $6,500 for existing homeowners (lived in a house for at least 5 of the last 8 years) who buy a new residence
    – Income limits for people to be eligible are increasing.

    Comment by Anonymous — Nov 6th 2009 @ 6:52 am
  4. I believe the credit is simply shifting demand and we will likely see a big lag in home sales once it is gone and really wish the government would stop handing out money right and left. However, I am glad they extended it for one reason. I am upside-down on my mortgage because we lost 25% of the value of our home and want to sell so we can move back to Oregon and be with family. We are sure this will help keep some buyers and entice new ones to the market when we list early next year.

    Comment by Anonymous — Nov 6th 2009 @ 6:56 am
  5. It still won’t benefit us as homeowners hoping to move since apparently it only runs until April.

    Comment by Anonymous — Nov 6th 2009 @ 8:54 am
  6. @Travis – to your point about gov’t injected demand, it is an old trick, but if the gov’t can get people feeling a little better (looser with the purse strings), real demand can increase to pickup where fiscal spending will leave off. I wouldn’t count on these tax credits going away until the gov’t is feeling pretty certain home sales won’t take another nosedive.

    Comment by Anonymous — Nov 6th 2009 @ 9:35 am
  7. @Michael Harr —

    That’s one point I’d forgotten. $8k in and of itself isn’t a compelling reason to buy a house… but the state of the economy IMHO is more about people’s perceptions, feelings, and emotions than anything else. The sucky part about being a consumption based economy is that if people aren’t spending, the economy is suffering. So we need them to spend.

    Comment by Anonymous — Nov 6th 2009 @ 9:53 am
  8. That’s positive news for the housing market, and it’s a psychological morale booster for non homebuyers as well.

    Comment by Anonymous — Nov 6th 2009 @ 10:05 am
  9. I feel that this doesn’t really help the home sales market and only helps the political capital of the congress-persons who supported it. A single windfall of $8000 for a buyer that the seller doesn’t know about helps in the purchase of a home. It truley is $8000 that helps with the purchase. However, if the windfall is available to nearly everyone and is widely publicized then the $8000 is just factored into the purchase price and pricing negotiations. Home prices will just gradually go up by the amount of the credit and after the credit expires they will jsut drift back down again. The only winners are the politicians and the only losers are the taxpayers.

    Comment by Anonymous — Nov 6th 2009 @ 10:19 am
  10. After thinking about this a bit more, the extension to existing homeowners doesn’t make much sense to me, as it won’t change the supply/demand equation. By enticing *new* homebuyers into the market, demand goes up, but supply remains the same (or goes down).

    I do, however, see the value of this if the goal is to stimulate spending. Speaking from personal experience, whenever we’ve moved, we’ve spent a lot of money setting up the new place.

    Comment by Nickel — Nov 6th 2009 @ 10:38 am
  11. We closed on our home on Sept. 24th. My income was just above the old income limit. Now, I would get the tax credit with the new limit! Am I out of luck? Also, I purchased the property with my boyfriend who was laid off for part of 2009, thus qualifying for the $8,000 credit. Could we both claim the credit or is it simply $8,000 total per property?

    Comment by Anonymous — Nov 6th 2009 @ 1:09 pm
  12. I have the same question about the income limit increase as Freebird. I closed on my house on June 30 and was just above the original income cap so I figured I wasn’t going to be able to get this. So now they increase the income cap, does that mean I’ll be able to claim this on my 2009 tax return or am I stuck with the original terms of the tax credit? I keep hoping the IRS will clarify in their FAQ. Anyone had any luck figuring this out?

    Comment by Anonymous — Nov 6th 2009 @ 1:17 pm
  13. So I have a question about this new tax credit, $6,500.00 as I didn’t qualify for the $8.000.00 due to income and the 3 years requirement.

    I am currently buying a house as a divorcee, who was the owner of a previous house via marriage. I was bought out of the house in 2007.

    Question…I lived in the previous house 7 out of 8 years; was joint owner for 7 years; I am scheduled to close on my house November 27th….do I qualify for the $6,500 tax credit?

    Comment by Anonymous — Nov 6th 2009 @ 4:15 pm
  14. This is RIDICULOUS!!!!

    We closed on our house on September 9th, so those of us who are responsible homeowners, put 20-30% down, and are propping up this whole f’ing economy are once again SCREWED. I have HAD it with this crap. If I had simply delayed the closing this would have applied. What a sham.

    Comment by Anonymous — Nov 7th 2009 @ 5:44 am
  15. Because my income is commission based & way down this year, I’ll qualify for the existing home owner’s credit, but plan to buy a house in January. Can I put the claim in against 2009 income, or will it have to be against 2010 income which I hope to have over the income limit?

    Comment by Anonymous — Nov 7th 2009 @ 8:41 am
  16. @Doug – you said it… if you simply delayed the closing, it would have applied, in Sept. there was a lot of talk about the possible extension and changes. Why didn’t you wait it out?

    @Karen – My daughter bought her house this past January and claimed the credit with her 2008 taxes.

    Comment by Anonymous — Nov 7th 2009 @ 11:36 am
  17. I FOR ONE HOPE THAT THE FIRST TIME HOMEOWNERS TAX CREDIT IS EXTENDED BECAUSE IT HELP ME AS A FIRST TIME HOMEOWNER AND A REAL ESTATE AGENT. I NEED THIS TO HELP ME IN MY SITUATION BECAUSE I AM TIRED OF BEING A RENTER , I WANT TO OWN A HOME AND FOR THE FIRST TIME IN MY LIFE I COULD GET AHEAD. THIS TAX BREAK WILL HELP A LOT OF PEOPLE UNLESS THE REPUBLICANS DON’T WANT TO HELP PEOPLE OR THEYT DON’T WANT TO SEE AMERICANS GET AHEAD OR BREAK EVEN, APRIL

    Comment by Anonymous — Nov 7th 2009 @ 6:29 pm
  18. I am about to purchase a new home.. which will be my new residence and I have lived in my home that I own now for over 5 years….
    But, I am not selling my old home I am going to rent it… So do I get the $6500 because I am purchasing a new residence….

    Comment by Anonymous — Nov 7th 2009 @ 11:12 pm
  19. @ Bryan, we had to get in to the house because my 6 year old son needed to start first grade. We have a lake house local to where we are but in a different town and we didn’t want to disrupt my son by removing him from one school and putting him in another. Ridiculous.

    Comment by Anonymous — Nov 8th 2009 @ 7:16 am
  20. Can anyone answer this (#18 above) question??
    at [email protected]
    [email protected]____
    I am about to purchase a new home.. which will be my new residence and I have lived in my home that I own now for over 5 years….
    But, I am not selling my old home I am going to rent it… So do I get the $6500 because I am purchasing a new residence…?
    ________________________________________________________________________
    Thank you

    Comment by Anonymous — Nov 9th 2009 @ 8:25 am
  21. I have the same question about the income limit increase as Freebird and Amy. I closed on my house on June 6, 2009 and was just above the original income cap so I figured I wasn’t going to be able to get this. So now they increase the income cap, does that mean I’ll be able to claim this on my 2009 tax return or am I stuck with the original terms of the tax credit? I keep hoping the IRS will clarify in their FAQ. Anyone had any luck figuring this out?

    Comment by Anonymous — Nov 9th 2009 @ 5:16 pm
  22. For the new Home Buyer Tax Credit frequently asked questions, go to this page:

    http://www.federalhousingtaxcredit.com/

    1. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

    Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
    2. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
    Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.

    Comment by Anonymous — Nov 9th 2009 @ 6:48 pm
  23. This still will not help the home owners who are stugling to make there payments.
    It would be nice if we could have a $6500 TAX CREDIT so we can stay in our houses.
    Do they not think it would help the ecomny for us to stay in our homes

    Comment by Anonymous — Nov 10th 2009 @ 11:10 am
  24. I encourage everyone who purchased between January 1, 2009 and November 6, 2009 to write their Congress-person to request / demand an amendment to the The Worker, Homeownership, and Business Assistance Act of 2009 to adjust the Act (income limit increase) to be applicable for all homes bought during the entire life of the Act, rather than just November 6, 2009 – April, 2010 timeframe.
    Our only hope is through your local congress.

    The information below is from the Federal Housing Tax Credit website:

    “The income limits for claiming the tax credit were raised when the tax credit was extended. Are the higher limits retroactive?
    No. The new income limits are only applicable to purchases occurring after November 6, 2009.

    The income limits for sales occuring on or after January 1, 2009 and on or before November 6, 2009 are $75,000 for single taxpayers and $150,000 for married couples filing jointly.”

    Comment by Anonymous — Nov 10th 2009 @ 1:55 pm
  25. Great idea Ann! I’m writing my letters today. Can anyone tell me whether a girlfriend/boyfriend can each claim $8,000 on their own tax returns (for a total of $16,000) if they both qualify separately for the credit and purchased the home together?

    Comment by Anonymous — Nov 10th 2009 @ 2:19 pm
  26. Freebird, I don’t think so, but check out the Frequently Asked Questions on the attached link http://www.federalhousingtaxcredit.com/faq1.php

    Comment by Anonymous — Nov 10th 2009 @ 2:32 pm
  27. I’ve owned & lived in my current home for 10 years. I bought land about five years ago and just completed building my new home on it. I used savings to build the home, not a bank loan. A family member has offered to make me a loan to pay back savings instead of going to the bank. I fall withing the income limits of the $6500 tax credit. Being i already owned the land and if i don’t get a bank loan can i still get the tax credit? if so, how do i prove to the irs i just built this home to get the tax credit???

    Comment by Anonymous — Nov 11th 2009 @ 10:40 pm
  28. I closed on my home 02-2005, im in the progress of closing on a new 2010 home in December being that my 5yr.aint until feburary and I cant file my taxes until then will I qualify for the tax credit.

    Comment by Anonymous — Nov 12th 2009 @ 8:16 pm
  29. We owned previous house for 8 years and sold it 1/26/09. We built a new home and took a construction loan on it last winter. We have no ‘closing statement’ per say, are paying interest only and we expect to get an occupancy permit in early spring (although we would have been able to move in earlier with a temporary housing permit, our City won’t give a permanent housing permit until the lawn can be installed, next spring. Would be be eligible for this $6500 credit? Or would IRS try and say we were able to get a temporary housing permit in Sept., that’s the ‘date’. Also what proof will be required for IRS?

    Comment by Anonymous — Nov 13th 2009 @ 11:47 pm
  30. @Ann Thank you for posting that, even though the answer is depressing. :/

    Comment by Anonymous — Nov 16th 2009 @ 8:52 am
  31. Here are some interesting facts about the Tax Credit….

    Obscure Facts About FTHB Tax Credits – IRS Style!
    The IRS gets the final say when it comes to who gets to claim the homebuyer tax credit, who does not, and under what circumstances? They have made a feeble attempt to update some of the FAQs posted on their website http://www.irs.gov/newsroom/article/0,,id=206291,00.html but if it’s anything like the last extension, it will take them a while to update their FAQ page.
    However, there are some little-known “interpretations” that most loan officers, real estate agents and even tax advisors don’t know about.
    1. When a First Time Home Buyer (FTHB) buys a 2-4-family home, and occupies one of the units as their personal residence, they are only allowed to claim 10% (or $8000 max) of the unit they OCCUPY–not the entire sales price. Example: If the FTHB bought a duplex for $120,000 and the units are identical, the “cost basis” is $60,000 and the tax credit they can claim would be $6,000.
    2. Income limits are based on ADJUSTED GROSS INCOME
    3. Income CAN Exceed $125,000 (single) and $225,000 (married) by up to $20,000 and FHTB & Long-term
    Residences can still get a partial tax credit based upon a “MAGI formula” created by the IRS.
    4. New Construction – the “date of purchase” is considered the “date” the FTHB OCCUPIES the property–not the closing date or the start-or-construction date.
    5. Homes sold on “Land Contract or Contract for Deed” to a FTHB can QUALIFY for a tax credit if they meet 7
    tests listed on the FAQs.
    6. Tax credit is not available for FTHB in US Territories–only the 50 states.

    Comment by Anonymous — Nov 17th 2009 @ 4:52 pm
  32. Bryan,
    Can you explain MAGI formula?
    Ann

    Comment by Anonymous — Nov 17th 2009 @ 10:40 pm
  33. Modified Adjusted Gross Income is a measure used by the IRS to determine if a taxpayer is eligible to use certain deductions, credits, or retirement plans. It is calculated by adding back certain items to your Adjusted Gross Income.

    Here are answers to this and many other questions regarding thr credit for repeat buyers from the following site: http://www.federalhousingtaxcredit.com/faq2.php#12

    1.Who is eligible to claim the $6,500 tax credit?
    Qualified move-up or repeat home buyers purchasing any kind of home are eligible to claim this credit.

    2.What is the definition of a move-up or repeat home buyer?
    The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a home owner who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.

    3.How is the amount of the tax credit determined?
    The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.

    4.Are there any income limits for claiming the tax credit?
    Yes. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

    5.What is “modified adjusted gross income”?
    Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and the first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains.

    To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.

    6.If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
    Possibly. It depends on your income. Partial credits of less than $6,500 are available for some taxpayers whose MAGI exceeds the phaseout limits.

    7.Can you give me an example of how the partial tax credit is determined?
    Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $6,500 by 0.5. The result is $3,250.

    Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $6,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,275.

    Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.

    8.How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? How is this different than the rules established in early 2009?
    The previous tax credits applied only to first-time home buyers and were for different amounts of money.

    9.How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
    You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns).

    No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and repeat home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.

    10.What types of homes will qualify for the tax credit?
    Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

    It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.

    11.I read that the tax credit is “refundable.” What does that mean?
    The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

    For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $6,500 home buyer tax credit. As a result, the taxpayer would receive a check for $5,500 ($6,500 minus the $1,000 owed).

    12.Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
    Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be after November 6, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April 30, 2010).

    In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. Be sure to check with a tax advisor in cases where a HUD-1 form is not used at settlement to be sure you have sufficient documentation to attach to IRS Form 5405.

    13.Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
    Yes. The tax credit can be combined with an MRB home buyer program.

    14.I am not a U.S. citizen. Can I claim the tax credit?
    Perhaps. Anyone who is not a nonresident alien (as defined by the IRS) and who has owned and resided in a principal residence in the United States for at least five consecutive years of the eight years prior to the purchase date can claim the tax credit if they meet the income limits. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. The IRS provides a definition of “nonresident alien” in IRS Publication 519.

    15.Is a tax credit the same as a tax deduction?
    No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $6,500 in income taxes and who receives an $6,500 tax credit would owe nothing to the IRS.

    A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $6,500 in income taxes. If the taxpayer receives a $6,500 deduction, the taxpayer’s tax liability would be reduced by $975 (15 percent of $6,500), or lowered from $6,500 to $5,525.

    16.Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
    Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

    Buyers should adjust the withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

    In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.

    17.HUD allows “monetization” of the tax credit. What does that mean?
    It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.

    Under the guidelines announced by HUD, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

    Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.

    In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.

    More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.

    18.If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

    Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.

    19.For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
    Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.

    Comment by Anonymous — Nov 18th 2009 @ 1:55 am
  34. The above is great information.In Paragraph #12 “a principal residence that is constructed by the home owner is treated by the tax code as having been ‘purchases’ on the date the owner first occupies the house’–how do you prove the ‘date the owner first occupies the house’? There is obviously no settlement statement so what will be needed for IRS?

    Comment by Anonymous — Nov 18th 2009 @ 1:29 pm
  35. Bonnie – That’s a question for your Tax Advisor. As stated in #12: “Be sure to check with a tax advisor in cases where a HUD-1 form is not used at settlement to be sure you have sufficient documentation to attach to IRS Form 5405”.

    Comment by Anonymous — Nov 18th 2009 @ 3:52 pm
  36. The new, expanded income limits apply only to those who purchased their home after Nov. 6, 2009. So if you bought a home earlier this year and are a first time buyer, the old income limits apply.

    Comment by Anonymous — Nov 20th 2009 @ 12:45 pm
  37. I went to contract 4-2009 and going to close on my house either December 2009 or January 2010 am I eligible for the $6,500 credit. I owned my previous house for 35 years but sold it in July 30th and am currently renting an apt. Thanks.

    Comment by Anonymous — Nov 21st 2009 @ 6:50 am
  38. What date did the $6500 tax credit for existing homeowners go in effect? Was it November 6, 2009?

    Comment by Anonymous — Nov 22nd 2009 @ 11:26 pm
  39. I did a cash out refinance on my primary residence this year. I took the cash and bought a second property. Will I qualify for the tax credit?

    Comment by Anonymous — Nov 23rd 2009 @ 12:29 pm
  40. If I buy a 4-plex, live in one as my primary residence and rent out the other 3, would it qualify for the first time home buyer credit?

    Comment by Anonymous — Dec 2nd 2009 @ 12:22 am
  41. if i close on a house in jan. 31 2010 ; and already am getting over 7000 dollars back will i still qualify for the 8000 tax credit ; i will be getting back about 15000 back?

    Comment by Anonymous — Dec 8th 2009 @ 3:29 pm
  42. We owned our other home for 34 years. Sold it last summer and bought present home for $370K. Do we qualify for the tax credit? We are retired with a total income of less than $60K.

    Comment by Anonymous — Dec 13th 2009 @ 7:45 pm
  43. We purchased a house in Oct. 2009 as first time buyers.
    The house is set up, furniture, utitlites, etc. We have stayed in the home in December 2009, however my husband’s job is in another state where we are renting an apartment. We plan on going back and forth until my husband secures a job where our house is located, as this is where we plan on living full time.
    Do we qualify for the 2009 housing tax credit?

    Comment by Anonymous — Jan 19th 2010 @ 9:23 pm
  44. My parents no longer need to file taxes. Both are retired and receive no income. They have owned a home for 48 years. If they purchase a new home before June 2010, can they still be eligible for $6,500 Long-Time HomeOwner Tax Credit?

    Comment by Anonymous — Jan 20th 2010 @ 10:08 am
  45. Will a temporary occupancy housing permit be eligible for the $8000 tax credit if all the other conditions are met?Bad weather slowed us down.

    Comment by Anonymous — Feb 28th 2010 @ 4:10 am
  46. I pay a mortgage on my home that I have lived in for 10 years and do not plan on selling.

    Does the Homeowner’s $6,500 tax credit benefit me in any way?

    Thank you for your comments.

    Comment by Anonymous — Apr 27th 2010 @ 10:31 am
  47. Lynda – unfortunately for you it’s a Home BUYER’s Tax Credit not a Home OWNER’s Tax Credit. It would only benefit you if you were buying a home.

    Comment by Anonymous — Apr 27th 2010 @ 5:53 pm
  48. [email protected] can I get a copy of revised from 5405?

    Thank you, Terry

    Comment by Anonymous — Apr 29th 2010 @ 6:00 pm

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