Buy a Home in 2010, Get a Tax Credit on Your 2009 Return

Not too long ago, the news world was abuzz with the revelation that the $8,000 homebuyer's tax credit was extended into 2010. In fact, we also published some handy information about it, complete with a breakdown of how it affects potential homebuyers. But there are a couple important facts that many have overlooked:

Current homeowners also can buy a new home and claim the credit.

It's not just limited to first-time buyers this time around; homeowners who have lived in their current home consecutively for five of the past eight years can receive up to $6,500 (or $3,250 if married, filing separate). Your previous home must have been your principal residence for those five years, and the credit is still subject to a number of the conditions faced by first-time buyers.

If you purchase a home in 2010, you can amend a 2009 tax return to claim the credit.

In other words, you don't have to wait until 2011. As long as you purchase (that is, you're under contract) by April 30, 2010, and close by June 30, 2010, you can choose to claim the credit on either your 2009 or 2010 return. Bear in mind, however, that for a home you have constructed, the purchase date is considered to be the first day you occupy the home. Check the IRS website for all the details.

Other notable details about the program:

  • The income limit for single taxpayers is $125,000; the income limit for married taxpayers is $225,000. The phase-out range is $20,000.
  • Any home that is purchased for $800,000 and under and will be used as a principle residence will qualify.
  • Ownership of a vacation home or rental property not used as a principal residence does not disqualify you as a first-time homebuyer.
  • A home purchased from a spouse, family member, or partnership/corporation in which you have a majority interest does not qualify for the credit.

There are other conditions, of course, and nothing above should be construed as tax or financial advice. For details and information related to your financial and tax situations, please consult a tax professional, financial advisor, or attorney.

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