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.
Several new restrictions apply to homes purchased after Nov. 6, 2009.
Purchasers must attach a properly executed settlement statement to their return.
No credit is available if the purchase price of the home exceeds $800,000.
The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse
must meet this age requirement.
A dependent is not eligible for the credit.
The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first
audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on
original and amended 2008 returns, as well as to claims yet to be filed.
Additionally, there are new benefits for members of the military and certain other federal employees:
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a
principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a
binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by
that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services,
members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It
applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty
service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and
ending before May 1, 2010.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services,
members of the Foreign Service and employees of the intelligence community. This relief applies where a home is
sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders
received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still
allowable even if this happens during the year of purchase. Qualified official extended duty is any period of
extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence
(whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended
duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or
for an indefinite period.
Question and Answer
Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011
extension to claim the credit?
A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse
to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.
Please note, you should consult a tax advisor, financial planner, and/or CPA concerning tax and financial
information.
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After April 30th
Tax Credits Still Available
Tax Credits Still Available
The following information if from www.IRS.gov. For more information, click here:
Income:
Purchase Price Limit:
Who Qualifies