Repeat Home Buyers' Tax Credit Facts

Who is eligible
Tax credit amounts
Types of homes that qualify
Income limits
Purchase price limit
Effective dates
Tax credit refunds

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Repeat Buyer Tax Credit Summary
Repeat Buyer Tax Credit FAQs
IRS Form 5405 Instructions
IRS Form 5405

Who is eligible

• The tax credit is available for taxpayers who have lived in their own home for five consecutive years of the past eight.
  
• All U.S. citizens who file taxes and are not claimed as dependents on anyone else's tax return are eligible to participate in the program.
  
• All taxpayers who claim a credit must use the home as their primary residence for the next three consecutive years.

Tax credit amounts

The tax credit is worth 10% of the purchase price of the home. The maximum credit is $6,500.

Types of homes that qualify

All homes, whether single-family, townhomes, mobile homes or condominiums will qualify. The tax credit includes newly constructed homes. The new home does not have to cost more than the old one.

The new home must be used as your principal residence. A principal residence is a residence in which an individual lives most of the time. Individuals may qualify for the tax credit even if they own a vacation home or rental property.

Income limits

The credit is phased out for individuals with modified adjusted gross income between $125,000 and $145,000. For married couples filing a joint return, the phase out range is $225,000 to $245,000.

For the purposes of determining income eligibility for this credit, adjusted gross income is modified by adding back the following excluded income:

• foreign earned income;
• income from Guam, American Samoa, or the Northern Mariana Islands;
• income from Puerto Rico.

Purchase price limit

No tax credit is available for homes over $800,000.

Effective dates

Qualified individuals will need to purchase a residence after November 6, 2009 and before May 1, 2010, and to close on the purchase prior to July 1, 2010.

Tax credit refunds

The credit is fully refundable. That means that a taxpayer who doesn't pay enough tax to offset the credit can get a refund. For example, if you qualify for a $6,500 credit but only owe $5,000 in taxes, you could receive a $1,500 check from the Internal Revenue Service.

People who purchase homes in 2009 may claim the tax credit on either their 2008 or 2009 returns. Those who purchase homes in 2010 may claim the tax credit on 2009 or 2010 returns.

This information is provided for general awareness only. It is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind. We encourage you to consult your tax advisor for more information.