Federal Tax Credit Extended and Expanded

The program providing first-time home buyers a tax credit of $8,000 has been extended to April 30, 2010 and expanded to allow for existing home owners who have been in their home for at least 5 years of the last 8 years to receive a $6,500 tax credit if they purchase a new primary residence.

Key considerations include:

First-time Home Buyers Tax Credit at a Glance

* Buyer must be someone who has not owned a home during the 3 year period prior to purchase.
* The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’ principal residence within 3 years after the initial purchase.
* The tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000
* The tax credit applies only to homes priced at $800,000 or less.
* The tax credit applies to sales occurring after 1/1/2009 and on or before 4/30/2010. However, in cases where a binding sales contract is signed by 4/30/2010, a home purchased by 6/30/2010 will qualify.
* For homes purchased after 11/6/2009 and on or before 4/30/2010, income limits are $125,000 for single taxpayers and $225,000 for married couples filing jointly for the full tax credit.

The Tax Credit Move-Up/Repeat Home Buyer

* Buyer must have owned and lived in their previous home for 5 consecutive years out of the last 8 years.
* The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within 3 years after the initial purchase.
* The tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500.
* The tax credit applies only to homes priced at $800,000 or less.
* The credit is available for homes purchased after 11/6/2009 and on or before 4/30/2010. However, where a binding sales contract is signed by 4/30/2010, the purchase qualifies if it is completed by 6/30/2010.
* Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.


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