Homebuyer Tax Credit
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Homebuyer Tax Credit Extended and Expanded
In an effort to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress recently passed legislation to:
~ Extend the First-Time Homebuyer Tax Credit through April 30, 2010
~ Expand the Homebuyer Tax Credit to apply to current homeowners who purchase a new or existing home between November
7, 2009 and April 30, 2010.
FAQs
Q. Who is eligible for the extended and expanded Homebuyer Tax Credit?
A. ~ First-time buyers who purchase a home between November 7, 2009 and April 30, 2010. To qualify as a first-time homebuyer, the
purchaser, or his/her spouse, may not have owned a residence during the three years prior to the purchase.
~ Current homeowners who purchase a home between November 7, 2009 and April 30, 2010. The home being sold or
vacated must have been used as a principal residence for five of the last eight years.
Q. What is the maximum tax credit available under the new guidelines?
A. First-time buyers- $8,000 or 10% of the purchase price, whichever is less
Current homeowners- $6,500 or 10% of the purchase price, whichever is less
Q. Which properties are eligible for purchase?
A. The extended tax credit only applies to primary residences, including single-family homes, condominiums, townhomes, and co-ops.
Q. How is the individual tax credit amount determined?
A. The tax credit amount is determined by two factors: the price of the home and the buyer's individual or household income.
1. Home Price- All homes purchased for $800,000 or less are eligible.
2. Individual/Household Income- under the new guidelines, eligible income limits were increased to $125,000 for individuals and
$225,000 for households.
Q. Can I still qualify for the tax credit if my income exceeds the prescribed limits?
A. Yes, but not for the maximum tax credit available. The tax credit gradually decreases for individuals earning between $125,000-
$145,000 and households earning between $225,000-$245,000. Click HERE to determine the tax credit available for individuals or
households exceeding the prescribed income limits. Individuals earning more than $145,000 and households earning more than
$245,000 are not eligible.
Q. Are you required to close on the property by April 30, 2010 to qualify for the tax credit?
A. No, as long as a written, binding contract to purchase is in effect by April 30, 2010. The purchaser must close by July 1, 2010.
Q. Is there a repayment requirement?
A. There is no repayment requirement for the tax credit provided the buyer occupies the home for at least three (3) years after purchase.
If the property is sold before the three-year period expires, the full amount of the credit will be recouped upon sale.
Q. How do I apply?
A. For purchases made on or after November 7, 2009, click HERE.
For purchases made between January 1, 2009 and November 6, 2009, click HERE.
Q. What IRS forms must I complete when applying?
A. Anyone applying for the homebuyer tax credit must complete IRS Form 5405. Click HERE to access the form.
Q. Can the tax credit be used for downpayment assistance or a bridge loan?
A. Yes. Several states, including Tennessee, have developed programs allowing this practice. Specific guidelines and regulations
vary among states, but typically apply to only FHA-insured mortgages. Tennessee's program, the Stimulus Second Mortgage
Program, is administered through the Tennessee Housing and Development Agency (THDA). Click on the links below for
additional information.
Stimulus Second Mortgage Program (THDA)- Contact Ed Lozier at elozier@thda.org or (615) 815-2082 for additional information.
Downpayment Assistance
Bridge Loans
For additional information, contact David Pair, WCAR Governmental Affairs Director, via Email or phone (615-604-8660).