Homebuyer Tax Credit

What is it?

Tax incentives to buy a new home before May 1, 2010

The Worker, Homeownership and Business Assistance Act of 2009 extends previous tax incentives for first-time homebuyers. It also expands the tax credit to allow certain long-time homeowners who purchase a replacement principal residence. You must enter into a binding contract to purchase a new home before May 1, 2010, and close before July 1, 2010 to be eligible for the tax credit. Click here for more details about how the tax credit works.

An extension of the first-time homebuyer tax credit

First-time homebuyers who buy a principal residence on or before April 30, 2010 may be eligible for a federal tax credit of up to $8,000 or 10% of the purchase price. To qualify as a "first-time homebuyer," you must not have owned a principal residence or main home during the three-year period prior to the purchase date of the new home.

New tax credit for certain repeat homebuyers

Certain long-time homeowners who purchase a replacement principal residence on or before April 30, 2010 may be eligible for a federal tax credit of up to $6,500. To qualify as a long-time homeowner, you must have owned a principal residence for any consecutive five-year period during the eight-year period immediately preceding the date of the replacement home purchase.

The tax credit generally does not have to be repaid

The homebuyer tax credit can be claimed on IRS Form 5405. Under the 2009 stimulus law and Worker, Homeownership and Business Assistance Act, the homebuyer tax credit generally does not have to be repaid. The home must remain your principal residence for at least three years after the purchase date. Otherwise, you may be required to repay the credit. Consult your tax advisor.

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WHBAA

Straight from the Source

Click here to read the full text of the Worker, Homeownership and Business Assistance Act of 2009. See pages 6–9 for details about the homebuyer tax credit.

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The information contained herein is drawn from sources that are believed to be reliable, but it cannot be guaranteed as to completeness or accuracy. The content is not intended to be, and should not be relied upon as, tax, legal, or financial planning advice. Consult your tax advisor for specific advice.

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