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New & Improved First Time Homebuyer Credit

TAX CREDIT EXTENSION:

President Signs Tax Credit Extension and Expansion

On votes of 98- 0 and 403 - 12, the Senate and House have respectively passed legislation that includes an extension and expansion of the homebuyer tax credit. President Obama signed the legislation on Friday, November 6. Many parts of it take effect immediately. As of the signing of the legislation, the income limits increase to $125,000 adjusted gross income on a single return and $225,000 on a joint return. In addition, the so-called "move-up" credit is also in effect as of November 6. Thus, individuals who have used a home as a principal residence for 5 consecutive years of the past 8 years will be eligible for a $6500 refundable tax credit for purchases completed between November 6, 2009 and April 30, 2010.

A summary of the new legislation is attached.

Homebuyer Tax Credit Summary

Who Gets It? (previous 1st time homebuyer credit) Details for the new credit in the link above.

You can qualify for the credit if you have not owned a principal residence in the US during the three year period that ends on the purchase date. In the case of married couples, both spouses must meet this criteria (even if they do not file joint tax returns.) Nonresident aliens do not qualify.

The home must be purchased between January 1, 2009 and November 30, 2009.

For newly constructed homes, the purchase date is the actual move-in date.

To qualify for this credit, the home cannot be bought from a spouse, parent, grandparent, child, or certain other related people.

There are income guidelines to meet. The credit is reduced or eliminated if you modified gross income (MAGI) is too high. The phase out range for single filers and married individuals who file separately is between $75,000 and $95,000(MAGI.) For those who file jointly, it is between $150,000 and $170,000 (MAGI.)


How Much is the Credit?

For a qualified home purchase between January 1, 2009 and November 30, 2009, the maximum credit equals the lesser of: 10% of the purchase price or $8000, or $4000 (for those who file as married filing separate status.)

Do I Have To Pay It Back?

Under the old rules, the homebuyer was required to repay the credit over 15 years. The new law eliminates this requirement. However, under the new law, buyers may have to repay the credit if they sell or stop using the home as their principal residence within three years of the purchase date.

A divorce-related home transfer for which the credit was claimed will not trigger the repayment rule. Instead, the spouse who winds up with the home takes over any repayment obligation.

If a homebuyer dies, any repayment obligation is eliminated.


Call Us To Talk About This Opportunity For You

Please feel free to give us a call to discuss how this opportunity may impact you. 207-689-9880. We have also included the Maine Association of Realtors "What You Should Know About the New First Time Homebuyer Tax Credit" release.
First Time Homebuyer Tax Credit FAQ
The Maine Association of Realtors has also launched a website with additional information on the tax credit.