The first-time homebuyer credit, first introduced by the Housing and Economic Recovery Act of 2008, was extended and revised by the American Recovery and Reinvestment Act of 2009. It provides two different treatments for the first-time homebuyers who buy a house in different periods. The credit is a refundable credit, and was invented in an effort to stimulate the economy and housing market.
Under both rules, An eligible taxpayer (and if married, both individuals) is the one has not owned and used a personal principal residence located in the United States during the three years prior to the date of purchase. Ownership of a home in a U.S. territory is not considered located in the U.S. which would not disqualify a taxpayer from claiming the credit. The credit also applies to people who are unmarried but purchase a house together. The allocation of the credit among these eligible co-owners is calculated in a reasonable and flexible way. I will provide details on this topic in future post. The credit is not available for a taxpayer who is a nonresident alien. The credit is not allowed for a purchase from a close relative, including a spouse, parent, grandparent, child, and grandchild.
For most taxpayers, the purchase date is the closing date. For taxpayers who construct their own house, the first purchase date is the date they first occupies the home.
The credit can be claimed on Form 5405. The taxpayer can elect the credit of a 2009 purchase on the 2008 tax return. The credit is treated as a 2009 credit under the ARRA of 2009 even if the election is made to claim on a 2008 return.
A table below summarizes the differences of first-time homebuyer credit as originally enacted by the 2008 act and as revised by the 2009 act.
Under both rules, An eligible taxpayer (and if married, both individuals) is the one has not owned and used a personal principal residence located in the United States during the three years prior to the date of purchase. Ownership of a home in a U.S. territory is not considered located in the U.S. which would not disqualify a taxpayer from claiming the credit. The credit also applies to people who are unmarried but purchase a house together. The allocation of the credit among these eligible co-owners is calculated in a reasonable and flexible way. I will provide details on this topic in future post. The credit is not available for a taxpayer who is a nonresident alien. The credit is not allowed for a purchase from a close relative, including a spouse, parent, grandparent, child, and grandchild.
For most taxpayers, the purchase date is the closing date. For taxpayers who construct their own house, the first purchase date is the date they first occupies the home.
The credit can be claimed on Form 5405. The taxpayer can elect the credit of a 2009 purchase on the 2008 tax return. The credit is treated as a 2009 credit under the ARRA of 2009 even if the election is made to claim on a 2008 return.
A table below summarizes the differences of first-time homebuyer credit as originally enacted by the 2008 act and as revised by the 2009 act.
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