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First-time home buyers’ tax credit finally extended

Following months of speculation and Congressional debate, President Barack Obama signed the “Worker, Homeownership and Business Assistance Act of 2009” into law, extending the popular First-Time Homebuyer tax credit originally scheduled to expire on Dec. 1. The legislation offers those in the process of buying a home more time to take advantage of the tax benefit if they close on a first-time home purchase by midnight on June 30, 2010.

According to the IRS, the credit has provided a tax benefit to more than 1.4 million taxpayers as of September. The credit enables those buying a primary residence for the first time to claim 10 percent of the purchase price of their home, up to $8,000 for single taxpayers or married taxpayers filing jointly.

“This is very good news for consumers looking to purchase their first home, particularly those who are still weeks away from closing on their purchase and would likely have just missed the original deadline,” said Mark Steber, chief tax officer, Jackson Hewitt. “Nearly a million and a half people have benefited from this credit, so with an additional seven months to the closing timeframe, so many more will now have the chance to benefit as well.”

The new provisions include the following changes:

  • Taxpayers must purchase a home, or be locked into a contract to close, before midnight on April 30, 2010. The closing must occur before midnight on June 30, 2010.
  • The credit is allowed in full for those with incomes up to $125,000 ($225,000 if married filing joint). The credit is reduced for taxpayers with an income between $125,000 and $145,000 ($225,000 and $245,000 if married filing joint) and is not available for taxpayers with an income higher than $145,000 ($245,000 if married filing joint).
  • Taxpayers (and their spouses) who have lived in their home for five consecutive years out of the eight years preceding closing on a new house may qualify for a reduced credit ($6,500 or $3,250 for those who file separately).
 
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