The Extended Homebuyer Tax Credit

The Extended HomebuyerTax Credit

© 2009 Coldwell Banker Real Estate LLC All Rights Reserved

This is a Coldwell Banker Presentation on the 2009/2010 Extended Homebuyer Tax Credit

This presentation is based on informationavailable as of November 7, 2009 andprovided by the National Association of

Realtors.

It is not meant to be tax or legal advice.

• As with any tax law change, checkwith a tax advisor regardingavailability, eligibility and possibletiming of any tax credit.

• As with any tax law change, checkwith a tax advisor regardingavailability, eligibility and possibletiming of any tax credit.

Agenda

Who qualifies?

Who does not qualify?

2009 Homebuyer Tax Credit – February 2009 Version

Key changes in the Extended 2009/2010 Version

Home Qualifications

Calculating the Tax Credit

Recapture - 3 Year Residency

Claiming the Credit?

Visit www.realtor.org for complete, detailed information

Who qualifies?

First time Home Buyer Has not owned another primary residence during the three years

prior to the date of purchase. Must be the buyer’s primary residence

Current Homeowner Primary residence for five consecutive years of

the previous eight years

Let’ s look at who qualifies for the tax credit..

Who does not qualify?Who does not qualify? A homebuyer whose income exceeds

Single Filers = $ 145,000

Married Filers = $245,000

A homebuyer who does not meet the residency requirement

Who does NOT qualify for the tax credit?

2009 Homebuyer Tax Credit – February Version

Maximum $8,000 First-Time Homebuyer Income Tax Credit

January 1 – November 30, 2009

Not available to current homeowners

Income Limits from $75,000 to $150,000

In February, 2009, Congress enacted the 2009 Homebuyer Tax Credit. This credit

was available to any first time homebuyer who purchased a home between

January 1st and November 30th. The maximum amount of this credit was

$8000 but was not available to current homeowners. There were also lower

income limits

First time home buyers who purchased a home between January 1st and

November 30th, 2009 are still subject to the terms of the credit that was

put into effect in February 2009.

Key changes in the Extended 2009/2010 Version

November 7, 2009 through April 30, 2010

Current Homeowners can now take advantage

Increased Income Limits

Maximum cost of purchased home

Key changes in the extended 2009/2010 version of the tax credit include

the following:

Homes that are purchased after November 7th , 2009 are eligible for the tax

credit under the extended 2009/2010 version. Although the credit terminates

on April 30, 2010, buyers will have until July 1st, 2010 to close as long as a written

binding contract to purchase is in effect on or before April 30th.Current homeowners

can now take advantage of a tax credit of up to $6500 In the previous plan,

maximum income for single homeowners was $95,000 and for married homeowners

was $170,000. The extended version increases those income limits to $145,000

and $245,000 respectively. Also, the limitation on the cost of the purchased

home is now $800,000. Homes purchased at prices higher than this are not

eligible for the tax credit.

Home Qualifications

Homeowner spends 50% or more of his/her time in residence

Condo, single family detached, co-op, townhouse or other

So what qualifies a home for the tax credit?

The home subject to the credit must be the “primary residence”To qualify as the primary residence, the homeowner must spendAT LEAST 50% of their time at this residence.

It can be a condo, single family detached, co-op, townhouse or something similar.

Home Price Limitations


Purchase Price $ 70,000

10% $ 7,000

Tax Credit $ 7,000

Purchase Price $ 200,000

10% $ 20,000

Tax Credit $ 8,000

For a first time homebuyer, the credit is calculated as 10% of the purchase priceor $8,000, whichever is less.Let’s look at two examples.

In the first example, the purchase price of the home is $70,000. Therefore, the taxcredit would be 10% of the purchase price, or $7000.

In the second example, the purchase price is $200,000. Since 10% of the purchaseprice is more than the maximum credit allowed, the tax credit would be $8000.

For a current homeowner who is purchasing a home, the calculation would be thesame but the maximum tax credit would be $6,500

Income Limitations


TYPE INCOME LIMIT PHASE OUT START RANGE

Single Filers $145,000 $125,000 $20,000

Married Filers $245,000 $225,000 $20,000

TYPE ACTUAL INCOME PHASE OUT STARTRANGE

PENETRATION

Married Filers $240,000 $225,000 $15,000 75%

The tax credit will be reduced by 75% or $6,000.Actual tax credit = $2,000.

Single filers making up to $125,000 Modified Adjusted Gross Income (MAGI) andmarried filers making up to $225,000 Modified Adjusted Gross Income (MAGI) areeligible for the full credit.

For single filers making over $125,000 and couples making over $225,000, the creditis proportionately reduced as incomes approach $145,000 and $245,000 respectively.

So if a first time homebuyer couple makes $240,000, the excess amount is used tocreate a fraction 15,000/20,000 (.75) times the credit amount.75% or $6,000 of the credit would be disallowed.They would still get a $2,000 credit. In the case of a current homeowner purchasinga home, the amount of the credit would be reduced to $500

There is a $20,000 range from qualifying for the full credit to not qualifying for any.In the case of a couple filing it is the difference from $225,000 to $245,000.A couple earning $240,000 is $15,000 into the $20,000 range, or 75%.

Recapture - 3 Year Residency

Tax credit must be repaid if the home is resold within three years

This provision is designed to prevent flipping homes in order to

get the tax credit

If the home is resold prior to three years of ownership, the tax credit must be

repaid.

This provision is designed to prevent flipping homes in order to get the tax credit.

Claiming the Credit?

2009 Tax Return

Amended 2009 Tax Return

2010 Tax Return

In order to take advantage of the extended home buyer tax credit, you cando any of the following:

1. Apply the credit to your 2009 tax return, filed on or before April 15, 20102. File an amended 2009 return or;3. Apply the credit on your 2010 return, filed on or before April 15, 2011

You will need to attach documentation of your purchase to your return.

Consult your tax advisor for more information.

Thank You

If I can be of further Assistance PleaseCall Ron at 206-963-3313 or e-mail meat [email protected] with your

questions