Archive for November, 2009

First-Time Homebuyer Credit

Tuesday, November 24th, 2009

The name for this relatively new tax credit is somewhat misleading.   Although Congress started out in this direction (limiting the credit to those taxpayers who qualified as a “first time homebuyer”) on November 6, 2009 the Worker, Homeownership and Business Assistance Act of 2009 expanded the provisions of the law (Public Law 111-92) to include those  current homeowners who are qualified.  

2008 Federal tax returns required the completion of Form 5405 with the tax credit amount being posted on line #69 of the Form 1040.  If you download the form from the IRS website ( you’ll also find the instructions for the completion of the form plus information regarding who is eligible for the credit and who is not.  Additionally, the 2008 version of the form can only be used for homes that were purchased before November 7, 2009 for which an election was made to claim the credit on the 2008 return.  A new version of the form will be released by the IRS in December 2009 for all qualified home purchases that were made after November 6, 2009 (whether the credit is claimed for 2008 or for 2009) and for all claims on 2009 tax returns for homes that were purchased at any time in 2009.  

First time homeowners can still qualify for a maximum tax credit of $8,000.00.  The maximum tax credit for a current homeowner is limited to a statutory maximum of $6,500.00.  The new law extends the deadline for qualifying home purchases from the original expiration date of November 30, 2009, to April 30, 2010.  Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase which is usually accomplished through the closing process with either a title company or an attorney.

Recent information from the Internal Revenue Service follows: