Oct. 29--A Senate committee reached a compromise to extend the $8,000 tax credit for first-time home buyers, a boost the housing industry expects will help it pull out of its two-year-old downturn.
- The compromise measure expands the tax credit to non first-time buyers and also raises income ceilings, while also extending the deadline to to April 30, 2010.
- Under the new proposal, people who have lived in a primary residence for five consecutive years would be eligible for a $6,500 credit when purchasing a new property.
- Incomes limits will be raised to $125,000 for individuals and $225,000 for couples, vs. $75,000 and $150,000 previously.
- The maximum house value rises to $800,000.
There are a lot of details not yet released. However, it is my understanding that:
- Home buyers would not have to repay the credit, provided the home remains their principal residence for at least 36 months.
- The amendment includes a military waiver provision, meaning the recapture provision would not apply in the case of a member of the Armed Forces, military intelligence or Foreign Service who is on qualified official extended duty. In addition, members of the military who have been deployed overseas for 90 days or more in 2008 or 2009 would have until April 30, 2011, to claim the home buyer tax credit.
- The amendment also includes anti-fraud language that provides math authority to the IRS to do greater oversight during the processing of the return rather than waiting for an audit situation. The amendment requires the taxpayer claiming the credit to be 18 or older as well as requiring a HUD-1 settlement statement to be attached when claiming the credit.
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