Tax credit deadline extended; another program introduced 11/14/2009 11:28 PM By MIKE GELLATLY Staff writer
After passing with an overwhelming, bipartisan majority in both the House and the Senate, President Barack Obama signed into law the Worker, Home-ownership and Business Assistance Act of 2009 on Nov. 6.
The bill extended unemployment benefits to individuals in states with high unemployment but also extended and expanded tax credits for people planning to buy a new home in the next several months.
The credit is now not just for first-time buyers; current or recent homeowners may also be eligible for a substantial tax break.
The program has been seen as a great success by those in the real estate industry, something that may be spurring an upturn in home sales.
"Absolutely, without a doubt," said Lyvia May of the Aiken Board of Realtors on the impact. "It's really been a spring; the market is back alive again. We needed the shot in the arm. I believe people who wouldn't ordinarily buy a home have been able to."
Speaking to the extension and its potential impact, May said, "I really believe that it will be positive. I think we're going to see an improvement overall in the economy as a whole because it is so reliant on the real estate market," she said.
While the credit has been taken up by thousands and has been expanded, not everyone hoping to move into a new home qualifies. The tax credit has changed when it was extended - income limits were increased, the documentation requirements were tightened, and the program's deadlines were extended.
Who qualifies?
* First-time homebuyer
First-time homebuyers purchasing any kind of home - new or resale - are eligible for a tax credit of up to $8,000. To qualify for the tax credit, a home purchase must occur on or before April 30, 2010. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the homeowner. The credit is calculated as 10 percent of the purchase price of the home, up to $8,000.
"First-time homebuyer" is defined as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the homebuyer and spouse.
For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither qualifies for the first-time homebuyer tax credit.
* Move-up homebuyer
A qualified move-up homebuyer is a homeowner 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 couples, the law tests the homeownership history of both the homebuyer and his/her spouse.
The credit maximum is $6,500 calculated in the same way as the first-time buyers credit.
When is it available?
SBlt First-time homebuyer
To qualify for the tax credit, a home purchase must occur on or after Jan. 1, 2009, and on or before April 30, 2010. The credit was set to expire Nov. 30 before the extension to the act was signed recently.
* Move-up homebuyer
The home, which must be a principal residence, must be purchased after Nov. 6, 2009, and on or before April 30, 2010.
What are the limits?
Homes being purchased for under $800,000 only apply. You do not need to be buying a more expensive house if you are a move-up buyer.
Income levels for both credits can be no higher than $125,000 for a single person or $225,000 for a couple.
How do I claim the tax credit?
You claim the tax credit on your federal income tax return. Specifically, homebuyers 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. No other application is necessary.
Contact Mike Gellatly at mgellatly@aikenstandard.com.
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Comment Title: No help at all
The house and senate should be unemployed come elction time...they take credit for these extensions but fail to tell you about the 12/31/09 deadline...yes that right at year end everyone gets ZIP!!!
Posted by: Bob Fox On: 11/15/2009
Comment Title: States taking time to issue checks
Hi I am bob from Las Vegas, NV and the president rushed the bill for extended unemployment benifits but the states are making us wait, WHY. Nevada said that we would be luck to see anything by Christmas but most after is a better chance. If they wait past the 1st of the year we wil not have the right to file.
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