The Worker, Homeownership and Business Assistance Act of 2009 included key provisions of interest to potential home buyers. Enacted Nov. 6, 2009, this legislation:

• Created a tax credit for existing homeowners who purchase a new home
• Extended the deadline for the first-time home-buyer credit
• Expanded the modified adjusted gross income (MAGI) eligibility

Tax credit initiated

The legislation created a tax credit for existing homeowners who want to upgrade,
downsize or simply purchase a different home. To claim the credit, the homeowner
must have lived in his or her current principal residence for at least five consecutive
years of the last eight. If a homeowner purchases a new principal residence, he or she
may be eligible for a tax credit of 10% of the new home’s purchase price (up to $6,500
for joint filers). However, no credit is allowed if the purchase price exceeds $800,000.
The deadlines and MAGI eligibility requirements for this credit are the same as those
for the fi rst-time home-buyer credit (see below).

First-time home-buyer tax-credit deadline extended

The legislation extended the deadline to qualify for the fi rst-time home-buyer
credit to include contracts signed before May 1, 2010. The purchases must close
before July 1, 2010. Personnel in the military serving outside the U.S. may have until
June 30, 2011, to take advantage of the credit. The first-time home-buyer credit is for
10%, up to $8,000, of the purchase price of a new home. First-time home buyers are
defined as individuals who have not owned a primary residence during the three-year
period ending on the new home’s purchase date.
 

Income thresholds increased

To be eligible to claim the full first-time home-buyer credit for purchases after
Nov. 6, 2009, the buyer’s MAGI must be below $125,000 (individual filers)
or $225,000 (joint filers). The credit is phased out for purchasers with MAGIs that
exceed those amounts, and eligibility is eliminated for those with MAGIs of $145,000
(individual filers) or $245,000 (joint filers) or more.
 

Consult your tax advisor

If you, or a family member, are purchasing or considering purchasing a home, be sure
to consult your tax advisor regarding your potential eligibility for a tax credit.