First-Time Homebuyer's Credit Extended and Expanded

If you thought you weren't going to close on your house in time to receive the First-Time Homebuyer's Credit -- there is good news from the White House. The credit has been extended to cover purchases made before May 1, 2010. You can still claim the credit if you sign a binding contract by that date, but closing must take place by July 1, 2010.

Some changes have been made to the requirements of eligibility as well. The adjusted gross income now phases out at $125,000 for single filers and $225,000 for joint filers. The old phase-out thresholds were $75,000 and $150,000, respectively.

The credit also includes repeat homebuyers who purchase a new principal residence and have lived in their current principal residences for at least five out of the last eight years. The maximum refundable credit for this new expansion to repeat buyers is $6,500.

One rule that is not changing is that a purchaser can treat the purchase as having occurred on December 31 of the previous year, and claim the credit against that year's taxes.

Responding to concerns about fraud and misuse of the credit, legislation also caps the purchase price of eligible homes at $800,000, excludes purchasers under 18 years of age, and tightens other requirements.

For questions regarding the First-Time Homebuyer's Credit, please feel free to contact Valley Oak Financial.