Homebuyers Tax Credit

1. The Extended Homebuyer
Tax Credit
This is a Coldwell Banker Presentation on the 2009/2010 Extended Homebuyer Tax Credit
© 2009 Coldwell Banker Real Estate LLC All Rights Reserved

2. This presentation is based on information
available as of November 7, 2009 and
provided by the National Association of
Realtors.
It is not meant to be tax or legal advice.
• As with any tax law change, check
with a tax advisor regarding
availability, eligibility and possible
timing of any tax credit.
• As with any tax law change, check
with a tax advisor regarding
availability, eligibility and possible
timing of any tax credit.

3. Agenda
 Who qualifies?
 Who does not qualify?
 2009 Homebuyer Tax Credit – February 2009 Version
 Key changes in the Extended 2009/2010 Version
 Home Qualifications
 Calculating the Tax Credit
 Recapture - 3 Year Residency
 Claiming the Credit?
Visit www.realtor.org for complete, detailed information

4. Who qualifies?
 First time Home Buyer
 Has not owned another primary residence during the three years
prior to the date of purchase.
 Must be the buyer’s primary residence
 Current Homeowner
 Primary residence for five consecutive years of
the previous eight years
Let’ s look at who qualifies for the tax credit..

5. Who does not qualify?
 A homebuyer whose income exceeds
 Single Filers = $ 145,000
 Married Filers = $245,000
 A homebuyer who does not meet the residency requirement
Who does NOT qualify for the tax credit?

6. 2009 Homebuyer Tax Credit – February Version
 Maximum $8,000 First-Time Homebuyer Income Tax Credit
 January 1 – November 30, 2009
 Not available to current homeowners
 Income Limits from $75,000 to $150,000

7. In February, 2009, Congress enacted the 2009 Homebuyer Tax Credit. This credit
was available to any first time homebuyer who purchased a home between
January 1st and November 30th. The maximum amount of this credit was
$8000 but was not available to current homeowners. There were also lower
income limits
First time home buyers who purchased a home between January 1st and
November 30th, 2009 are still subject to the terms of the credit that was
put into effect in February 2009.

8. Key changes in the Extended 2009/2010 Version
 November 7, 2009 through April 30, 2010
 Current Homeowners can now take advantage
 Increased Income Limits
 Maximum cost of purchased home

9. Key changes in the extended 2009/2010 version of the tax credit include
the following:
Homes that are purchased after November 7th , 2009 are eligible for the tax
credit under the extended 2009/2010 version. Although the credit terminates
on April 30, 2010, buyers will have until July 1st, 2010 to close as long as a written
binding contract to purchase is in effect on or before April 30th.Current homeowners
can now take advantage of a tax credit of up to $6500 In the previous plan,
maximum income for single homeowners was $95,000 and for married homeowners
was $170,000. The extended version increases those income limits to $145,000
and $245,000 respectively. Also, the limitation on the cost of the purchased
home is now $800,000. Homes purchased at prices higher than this are not
eligible for the tax credit.

10. Home Qualifications
 Homeowner spends 50% or more of his/her time in residence
 Condo, single family detached, co-op, townhouse or other

11. So what qualifies a home for the tax credit?
The home subject to the credit must be the “primary residence”
To qualify as the primary residence, the homeowner must spend
AT LEAST 50% of their time at this residence.
It can be a condo, single family detached, co-op, townhouse or something similar.

12. Calculating the Tax Credit
Home Price Limitations
Purchase Price $ 70,000 Purchase Price $ 200,000
10% $ 7,000 10% $ 20,000
Tax Credit $ 7,000 Tax Credit $ 8,000

13. For a first time homebuyer, the credit is calculated as 10% of the purchase price
or $8,000, whichever is less.
Let’s look at two examples.
In the first example, the purchase price of the home is $70,000. Therefore, the tax
credit would be 10% of the purchase price, or $7000.
In the second example, the purchase price is $200,000. Since 10% of the purchase
price is more than the maximum credit allowed, the tax credit would be $8000.
For a current homeowner who is purchasing a home, the calculation would be the
same but the maximum tax credit would be $6,500

14. Calculating the Tax Credit
Income Limitations
TYPE INCOME LIMIT PHASE OUT START RANGE
Single Filers $145,000 $125,000 $20,000
Married Filers $245,000 $225,000 $20,000
RANGE
TYPE ACTUAL INCOME PHASE OUT START PENETRATION
Married Filers $240,000 $225,000 $15,000 75%
The tax credit will be reduced by 75% or $6,000.
Actual tax credit = $2,000.

15. Single filers making up to $125,000 Modified Adjusted Gross Income (MAGI) and
married filers making up to $225,000 Modified Adjusted Gross Income (MAGI) are
eligible for the full credit.
For single filers making over $125,000 and couples making over $225,000, the credit
is proportionately reduced as incomes approach $145,000 and $245,000 respectively.
So if a first time homebuyer couple makes $240,000, the excess amount is used to
create a fraction 15,000/20,000 (.75) times the credit amount.
75% or $6,000 of the credit would be disallowed.
They would still get a $2,000 credit. In the case of a current homeowner purchasing
a home, the amount of the credit would be reduced to $500
There is a $20,000 range from qualifying for the full credit to not qualifying for any.
In the case of a couple filing it is the difference from $225,000 to $245,000.
A couple earning $240,000 is $15,000 into the $20,000 range, or 75%.

16. Recapture - 3 Year Residency
 Tax credit must be repaid if the home is resold within three years
 This provision is designed to prevent flipping homes in order to
get the tax credit

17. If the home is resold prior to three years of ownership, the tax credit must be
repaid.
This provision is designed to prevent flipping homes in order to get the tax credit.

18. Claiming the Credit?
 2009 Tax Return
 Amended 2009 Tax Return
 2010 Tax Return

19. In order to take advantage of the extended home buyer tax credit, you can
do any of the following:
1. Apply the credit to your 2009 tax return, filed on or before April 15, 2010
2. File an amended 2009 return or;
3. Apply the credit on your 2010 return, filed on or before April 15, 2011
You will need to attach documentation of your purchase to your return.
Consult your tax advisor for more information.

20. Thank You
If I can be of further Assistance Please
Call Ron at 206-963-3313 or e-mail me
at ron@homesearch-wa.com with your
questions