First-time Homebuyers Credit gets extended and expanded

Uncle Sam just keeps making the first-time homebuyer credit better and better. When first enacted in 2008, the credit was 10 percent of the purchase price of a qualifying residence up to a maximum of $ 7,500. The credit applied only to homes purchased prior to July 1, 2009. In the original legislation, taxpayers were required to repay the credit over a 15-year period, which ultimately made this credit no more than a interest-free loan.

In February 2009, Uncle Same sweetened the deal by increasing the maximum credit to $ 8,000, extending the cut-off date to November 30, 2009 and elimi- nated the requirement to repay the credit . Eliminating the re- quirement to pay back the credit makes this tax break a red-hot deal.

In November of 2009, Uncle Sam improved the tax credit once more by expanding the definition of who qualifies as a first-time homebuyer and ex- tending the time to purchase your home through April 30, 2010. For homes acquired after November 6, 2009 the credit is no longer restricted to first-time purchases. Under the new rules, long-time residents may be eligi- ble for a reduced credit. To qualify, you must have lived in your old residence for any five- consecutive year period during the last eight-years, ending on the date your new residence is purchased. The credit for long- term homebuyers is 10 percent of the qualifying home’s purchase price up to a maximum credit of $ 6,500.

The income phase out threshold is increased to $ 225,000 MFJ.