2010 Federal Tax Credit for Home Buyers
Congress and the Obama administration have extended and expanded the homebuyer tax credit. The following spreadsheet should answer any questions you may have about the credit. The information below was obtained from the National Association of REALTORS Government Affairs Division. Beacham & Company makes no guarantees or warranties that the information is correct and further stipulates that this information may contain errors and omissions. You should consult your accountant before basing a decision to purchase a home on federal or state homebuyer tax credits.
| FEATURE | Jan 1 - November 30, 2009 Rules as enacted February 2009 |
December 1 - April 30,2010 Rules as enacted November 2009 |
|---|---|---|
| First-time Buyer - Amount of Credit |
$8,000 ($4,000 married filing separate) | $8,000 ($4,000 married filing separate) |
| First-time Buyer - Definition for Eligibility |
May not have had an interest in a principal residence for 3 years prior to purchase | Same |
| Current Homeowner - Amount of Credit |
No Provision | $6,500 ($3,250 married filing separate) |
| Effective Date - Current Owner |
No Provision | Date of Enactment |
| Current Homeowner - Definition of Eligibility |
No Provision | Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years |
| Termination of Credit | Purchases after November 30, 2009. (Becomes April 30, 2010 on Date of Enactment) | Purchases after April 30, 2010 |
| Binding Contract Rule | None | So long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. |
| Income Limits (Note: Increased income limits are effective as of date of enactment of bill) |
$75,000 - Single; $150,000 - Married; Additional $20,000 phase out | $125,000 - Single; $225,000 - Married; Additional $20,000 phase out |
| Limitation on Cost of Purchased Home | None | $800,000 Effective Date of Enactment |
| Purchase by a Dependent | No Provision | Ineligible Effective Date of Enactment |
| Anti-fraud Rule | None | Purchaser must attach documentation of purchase to tax return |
Frequently Asked Questions about the Federal Tax Credit for Home Buyers
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a non-negotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.