As expected,  the first time home credit was extended to May 1st, 2010.  The new wrinkle to this stimulus package is help for the existing homeowner, defined as someone who has owned their home for 5 years.   If you fall in this category you will be eligible for up to a $6,500 credit when you purchase a “new” home. Clearly, the idea is to boost the market for other sectors beyond the first time purchases.   Here are the details:

First-time homebuyer credit

The Act extends and modifies the first-time homebuyer tax credit. Specifically, the Act:

• Extends the first-time homebuyer credit to principal residences purchased before May 1, 2010. The credit is extended to principal residences purchased before July 1, 2010 if a written binding contract is entered into prior to May 1, 2010.
• Increases the income limits that apply to the credit. For the purchase of a principal residence after November 6, 2009 the credit is reduced if modified adjusted gross income (MAGI) exceeds $125,000 ($225,000 if married filing a joint return) and is completely eliminated if MAGI reaches $145,000 ($245,000 if married filing a joint return).
• Establishes a new limitation: effective for purchases made after November 6, 2009, the first-time homebuyer credit is not available if the purchase price of a principal residence exceeds $800,000.
• Expands eligibility (purchases made after November 6, 2009) by allowing some existing homeowners to qualify for the credit when they purchase a new principal residence. Specifically, an individual (and, if married, the individual’s spouse) who has maintained the same principal residence for at least five consecutive years in the eight-year period ending on the date that a subsequent principal residence is purchased, will be considered a first-time homebuyer for purposes of the credit. In such a case, the maximum amount of the credit is $6,500 ($3,250 for a married individual filing separately).

For purposes of the credit, in the case of a purchase of a principal residence after December 31, 2008, a taxpayer may elect to treat the purchase as if it were made on December 31 of the calendar year preceding the purchase for purposes of claiming the credit on the prior year’s tax return. This means qualifying purchases in 2009 can be treated as if they were made on December 31, 2008, and qualifying purchases in 2010 can be treated as if they were made on December 31, 2009.

The Act also imposes additional new limitations on purchases made after November 6, 2009:

• No credit is allowed unless the taxpayer is 18 years of age as of the date of purchase. A taxpayer who is married is treated as meeting the age requirement if the taxpayer or the taxpayer’s spouse meets the age requirement.
• The definition of purchase excludes property acquired from a person related to the person acquiring such property or the spouse of the person acquiring the property, if married.
• No credit is allowed to any taxpayer if the taxpayer is a dependent of another taxpayer.

For tax years ending after November 6, 2009, no credit is allowed unless the taxpayer attaches to the relevant tax return a properly executed copy of the settlement statement used to complete the purchase.

The Act also includes special provisions for members of the uniformed services and others who receive government orders for qualified official extended duty service. These provisions include extended time to claim the credit.