Worker, Homeownership and Business Assistance Act of 2009
Q: My husband and I have heard about the First Time Homebuyer Tax Credit. We are thinking about buying a house and the credit would really help but we previously owned a home up north. We sold that in 1989. It seems like a long time ago. Could we still apply for the credit?
A: You are referring to the Worker, Homeownership and Business Assistance Act of 2009. This was signed into law in early November 2009. You are eligible for this if you have not owned a home for the previous three years. Also, you must enter into a binding contract to buy a principal residence on or before April 30 and you must close on this home by June 30. The home that you sold in 1989 would have no bearing at all.
Interestingly, you might have been eligible for a tax credit even if you have own a home now. The new law has created a new category of “first time” home buyers. These are home owners who are buying a principal residence to replace the one they currently own. A credit of up to $6,500 is available to them. If one of the homeowners is a married individual who is filing separately, the credit is limited to $3,250.
Also, the law says “In the case of an individual (and, if married, such individual’s spouse) who has owned and used the same residence as such individual’s principal residence for any 5-consecutive-year period during the 8-year period ending on the date of purchase of a subsequent principal residence, such individual shall be treated as a first-time home buyer.”
There are some restrictions. The credit phases out for individual tax payers who have modified adjusted gross income between $125,000 and $145,000. A house with a purchase price over $800,000 does not qualify. Also, you must be at least 18 years of age at the time of the closing. If the home you purchase ceases to be your principal residence within three years of purchase, the tax credit must be repaid.
You must file IRS Form 5405 with your original or amended tax return to claim the credit and be sure to attach a copy of the purchase’s settlement statement. You can receive this credit, even if you don’t owe taxes. The government will actually send you a check.
Attorney Sylvia Heldreth is a Certified Specialist in Real Estate Law. Her office is located at 1215 Miramar Street in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.