Move-Up/Repeat Home Buyer Tax Credit

• The Act establishes a refundable tax credit (“Tax Credit”) for qualified move-up or repeat home buyers purchasing any kind of home are eligible to claim this credit.
• The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a person who has owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. That is both spouses must qualify as long-time residents with at least five years of principal residency for each. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
• The Tax Credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.
• The Tax Credit does have income limits, for the single taxpayer the income limits is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyer with a modified adjusted gross income (MAGI) above those limits.
• The Tax Credit will not apply if the home is purchased from a related person (i.e. relative).
• Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased fro a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
• You can claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for the 2009 return. No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and first-time home buyer tests. NOTE: you cannot claim the credit on the Form 5405 for an intended purchase for some future date; it must be a completed home purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.