If your contract is signed by April 30, 2010, you have until September 30th to take advantage of the First Time Home Buyer Tax Credit.

Tax Credit Program at a Glance:

$8000 Tax Credit for First-Time Home Buyer

·The $8,000 tax credit is for first-time homebuyers only. For the tax credit program, the IRS defines a first-time homebuyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

·The tax credit does not have to be repaid unless the home is sold or ceases to be used as the principal residence of the buyer within three years after the initial purchase.

·The tax credit is equal to 10 percent of the purchase price of the home up to a maximum of $8,000.

·The tax credit applies only to homes priced at $800,000 or less.

·The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by September 30, 2010 will qualify. Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the spouse of the individual) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.

·For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.

·For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

$6500 Tax Credit for Move-Up/Repeat Home Buyer

·To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.

·The tax credit does not have to be repaid unless the home is sold or ceases to be used as the principal residence of the buyer within three years after the initial purchase.

·The tax credit is equal to 10 percent of the home purchase price.

·The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010, however in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies, provided it is completed by September 30, 2010.

·Single Taxpayers with incomes up to $125,000 and married couples with income up to $225,000 qualify for the full tax credit.

·In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the principal residence of the taxpayer after Dec. 31, 2008, in connection with government orders received by the individual (or the spouse of the individual) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the principal residence of the taxpayer (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Contact Baillie & Hershman P.C. at 800-905-6534 for more information.

Office Locations: Cheshire Farmington Norwalk Waterford

This is provided for your information only and is not intended to be relied on as tax, legal or financial advice. Please consult your own tax or financial professional if such advice is sought.