Phil's Real Estate Blog

First-Time Homebuyer Tax Credit Extension

November 6, 2009

President Barack Obama signed the “Worker, Homeownership and Business Assistance Act of 2009” into law on Friday, extending the first-time homebuyer tax credit as well as certain jobless benefits at a time when the US unemployment rate has officially reached 10.2%.

With the first-time homebuyer tax credit originally scheduled to expire on Dec. 1, 2009, HR 3548 now allows first-time buyers to claim 10% of the purchase price of their home, up to $8,000 for single or married taxpayers filing jointly, if they close on the purchase by midnight June 30, 2010. Taxpayers must purchase or be locked into a contract to close before midnight on April 30, 2010.

The credit has provided more than 1.4m to taxpayers as of September 2009, according to the Internal Revenue Service.

New provisions accompany the extension. The credit is allowed for those with incomes up to $125,000 or $225,000 for taxpayers filing jointly. The credit reduces for those with incomes between $125,000 and $145,000 - or $225,000 and $245,000 if filing jointly. Anyone with an income higher than $145,000, $245,000 if filing jointly, cannot not receive credit.

Taxpayers who have lived in their home for five consecutive years during the eight years before closing on a new home may qualify for a reduced credit - $6,500 joint filers and $3,250 for those who file jointly.

The bill passed the House of Representatives on September 22, 2009, with 331 votes for and 83 votes against. When the bill landed in the Senate, it [1] passed with 98 votes for and 0 votes against.