Although the tax credit has expired for most home buyers, Congress has acknowledged the unique circumstances affecting members of the military, the foreign service, and the intelligence community by making the following exceptions that apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.

Extention of Tax Credit Deadlines

The home buyer tax credit was available for quailfied purchases with a binding sale contract in place on or before April 30, 2010 and which are closed by June 30, 2010.

However, for qualified service members who were ordered on a period of official extended duty, these dates are extended for one year. For these home buyers, the tax credit applies to sales with a binding contract in place on or before April 30, 2011 and closed by June 30, 2011.

Definitions

'Qualified service member' means a member of the uniformed services of the U.S. military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.

'Official extended duty' means any period of extended duty outside of the United States for at least 90 days during the period beginning after December 21, 2008 and ending before May 1, 2010.

Exemption from Tax Credit Recapture Rules

Typically, homes that are sold or that cease to be used as a principal residence within three years of the intial purchase are subjet to recapture of the tax credit. However, qualified service members who sell or move from a tax credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.

FIRST TIME BUYERS
Credit: Equal to 10 percent of the home's purchase price, up to $8,000
 
Who Qualifies?

  • Those who haven't owned property in the last three years
  • Those with income up to $225,000 for couples or $125,000 for individuals (credit phases out for people who make more than these amounts)
  • Must be at least 18 years of age to claim credit
  • Purchase price must be $800,000 or less

 

CURRENT HOMEOWNERS
Credit: Equal to 10 percent of the home's purchase price, up to $6,500
 
Who Qualifies?

  • Those who have owned and lived in their principal residence for at least five consecutive years during the past eight years
  • Those with income up to $225,000 for couples or $125,000 for individuals (credit phases out for people who make more than these amounts)
  • Must be at least 18 years of age to claim credit
  • Purchase price must be $800,000 or less

Deadlines:

  • Have until April 30, 2010, to enter into contract for a home purchase
  • Have until June 30, 2010, to close on the purchase

 

In addition, buyers have another year to take advantage of the higher loan limit for mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac set at 125 percent of local median home sales prices. The limit in normal markets (including the Tupelo area) will remain $271,050 for FHA and $417,000 for Fannie Mae and Freddie Mac.
 
The tax credit does not have to be repaid provided you live in the new home for a minimum of three years.  Military families are exempt from this stipulation.

Purchaser must attach documentation of purchase to tax return. 

Please consult with a tax professional for individual eligibility and implications of the Homebuyer Tax Credit.  

 

Use these links to find more information about the tax credit:

First-Time Homebuyer Advice - Do You Fit the Profile of a First-Time Homebuyer…Who should act now?

Homebuyer Tax Credit FAQ from NAR - Homebuyer Tax Credit FAQ from National Associations of Realtors

Tax Credit Comparison Chart from NAR - Tax Credit Comparison Chart from National Association of Realtors

IRS.gov - First-time homebuyer information