Good news for first-time homebuyers who were slow off the mark, and others thinking about moving house – Congress has extended the first-time homebuyer credit, and expanded the credit to “long-time residents of the same principal residence”.

First-time homebuyers (those who have not owned a principal residence within the last three years) now have until April 30, 2010 to get under contract on a home. Closing must occur before July 1, 2010. Just to recap, the credit is 10% of the purchase price to a maximum of $8,000. This amount does not have to be repaid unless the taxpayer fails to own and occupy the new home as a principal residence for 36 months after closing. Congress also extended the rule that allows taxpayers to file an amended return to claim the credit, as if the purchase had been made on December 31 of the year prior to the actual purchase. In addition, taxpayers utilizing certain loan programs can monetize this credit towards their down-payment and closing costs. Stop press: Congress has extended the time for closing on a contract that was signed before April 30, 2010 to Sept 30,2010.

The second credit targets those who have owned and occupied their principal residence for five consecutive years out of the last eight, and wish to move up or down. This credit is limited to 10% of the purchase price of the new home, or $6,500, whichever is lower. It also need not be repaid if the new home is held for 36 months as a principal residence, and is subject to the same purchase deadlines.

Both credits phase out for taxpayers whose modified adjusted gross income exceeds $125,000 ($225,000 for married taxpayers filing jointly). High-end homes are excluded from the credit – the maximum purchase price is $800,000, with no regional adjustments. Generally taxpayers must be 18 or older to claim the credits.

Finally, these time limits are extended by one year, and the subsequent residence requirement is waived for certain members of the military.

Since this article is intended to be a brief synopsis of some very complex rules, taxpayers are advised to seek the advice of a CPA or an attorney.

Dr. Alison Riley, CPA, Realtor

New Home Tallahassee LLC

www.NewHomeTallahassee.com

Sunshine State Tax and Accounting Services LLC

www.suntaxfla.com