Public Employee Press

Municipal Employees Housing Program
Deadline nears for Obama’s $8,000 tax credit for first-time homebuyers

If you purchase a home, condominium or co-op apartment by April 30, President Barack Obama will extend a helping hand.

DC 37’s Municipal Employees Housing Program has been urging members who qualify not to miss out on the valuable federal tax credits, said Director Franklin Golden.

Obama’s first-time homebuyer tax credit program provides an $8,000 federal tax credit for people who buy homes by April 30 and close the deal by June 30. And some current or previous homeowners who purchase a primary residence by April 30 may qualify for a $6,500 tax break.

To qualify for the $8,000 tax credit, you must meet these eligibility requirements:

• You must be a first-time homebuyer who has not been listed on the title of a prior home for at least three years.
• You must purchase your home between Jan. 1, 2009, and April 30, 2010. The purchase date is the closing date, when property title is transferred to the new owner.
• You are eligible if you have a binding sales contract in force by April 30, 2010, and close by June 30, 2010.

The federal tax credit is 10 percent of the purchase price, up to a maximum of $8,000. Any home purchased for up to $800,000 qualifies. The credit does not apply if the home is purchased from a family member, a spouse or member of the spouse’s family.

How to claim it

Income limits for sales occurring between Jan. 1 and Nov. 6, 2009, were $75,000 for single taxpayers and $150,000 for married couples filing jointly. After Nov. 6, 2009, the limits rose to $125,000 (single) and $225,000 (married filing jointly).

To claim the tax credit, complete IRS Form 5405. The homebuyer must also attach a copy of the HUD-1 settlement or closing statement to Form 5405 as proof of a completed home purchase. MEHP urges buyers to use professional tax preparers.

Additionally, the new “long-time resident” provision of the tax credit program lets current home-owners buying a replacement primary residence after Nov. 6, 2009, qualify for a tax credit of up to $6,500 (up to $3,250 for a married individual filing separately).

To qualify for the $6,500 tax credit, the home-owner buying a replacement home must buy, or enter into a binding contract to buy the replacement principal residence between Nov. 6, 2009, and April 30, 2010, and close on the home purchase by June 30, 2010. The homeowner must have owned and used the same primary residence for any five consecutive years during the eight years before the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight years would run from Dec. 1, 2001, through Nov. 30, 2009.

The IRS has stepped up compliance checks involving the homebuyer credit for those with past homes. They must provide a mortgage, interest statements, property tax records or homeowner’s insurance records to prove compliance with the past-residency criteria.

— DSW