The Hansen Ohana wants you to know:
First-Time Homebuyer Credit
Updated Nov. 6, 2009, to reflect new legislation — more to be added soon
New legislation, the Worker, Homeownership and Business Assistance Act of
2009, which was signed into law on Nov. 6, 2009, extends and expands the
first-time homebuyer credit allowed by previous Acts. The new law:
• Extends deadlines for purchasing and closing on a home.
• Authorizes the credit for long-time homeowners buying a replacement
• Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding
contract to buy, a principal residence on or before April 30, 2010 and close on
the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have
the option of claiming the credit on either their 2009 or 2010 return.
For the first time, long-time homeowners who buy a replacement principal
residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for
a married individual filing separately). They must have lived in the same
principal residence for any five-consecutive year period during the eight-year
period that ended on the date the replacement home is purchased.
People with higher incomes can now qualify for the credit. The new law raises
the income limits for homes purchased after Nov. 6, 2009. The credit phases
out for individual taxpayers with modified adjusted gross income (MAGI)
between $125,000 and $145,000 or between $225,000 and $245,000 for joint
filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to
$170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.
Homebuyers who purchased a home in 2008 or 2009 may be able to take
advantage of the first-time homebuyer credit. The credit:
• Applies only to homes used as a taxpayer’s principal residence.
• Reduces a taxpayer’s tax bill or increases his or her refund, dollar for
• Is fully refundable, meaning the credit will be paid out to eligible
taxpayers, even if they owe no tax or the credit is more than the tax
The credit is claimed using Form 5405, which you file with your original or
amended tax return.