If you’ve been wanting to take advantage of today’s historically low mortgage rates, now is definitely a good time. The popular home buyer tax credit has recently been extended by Congress.
The program is now being offered to all eligible home sales occurring between January 1, 2009 and April 30, 2010. In addition to the previous $8,000 refundable tax credit available to first-time home buyers, the extension includes a new provision offering a $6,500 credit to homeowners looking to relocate provided that they have lived in their current residence for a minimum of five years. It is important to note that the provision for the $6500 tax credit only applies to homes purchased after Nov. 6th 2009 and is not retroactive.
Income limit provisions
In addition, Congress has increased the income limits for the program. To qualify for the full $8000 credit, individual taxpayers cannot make in excess of $125,000 and joint filers cannot make more than $225,000. The limits under the previous credit were $75,000 for single filers and $150,000 for joint filers. However, there is still a possibility for you to qualify for a partial credit if you make slightly above these amounts. The credit is ruled completely out for single home buyers with incomes above $145,000 and $245,000 for joint filers as well as for homes bought in excess of $800,000.
In addition, applicants cannot have owned a home as a primary residence within the last 3 years and are required to stay in the home that you are purchasing for an equal amount of time. If you sell your home within three years of the date of purchase you will be required to repay the full amount of the received credit. Also, you cannot claim either credit if you inherited or were gifted a home from a family member or loved one.
Receiving the credit is easy- simply claim the eligible amount via form 5405 on your tax return for 2009 or file an amended return for 2008. No additional forms or paperwork are necessary. Also, depending on the lender, you can now apply the credit as a down payment on a mortgage loan.