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IRS Homebuyer Credit Now Available for homeowners buying a replacement principal residence

Homebuyer Credit Now Available for homeowners buying a replacement principal residence

The Popular Government’s First-Time Homebuyer Credit, which is credited for much of the housing recovery, is now available for long-time homeowners buying a replacement principal residence, making it ideal for coastal transplants and retirees.

[See http://www.irs.gov/newsroom/article/0,,id=204671,00.html for details]

"This could get a lot of the home buyers who have been waiting for just the right time to make a move." - says Alice Donahue, South Padre Island's Leading Broker.

Indeed, low interest rates, increasing home values, deals & incentives on new homes, an improving coastal look, and many more reasons make this an ideal time to buy on the Texas coast.

We have a fantastic array of home products available on the Texas coast from high-rises to condos to beach mansions to new urbanism resort destinations.

There are a few new projects that got in trouble during the recession and those projects carry more risk, while others proved their value even during the recession, make sure you get with a trusted Realtor in your market to find out which ones those are.

In particular, we favor the new-urbanism communities on South Padre and Port Aransas that bring a new level of quality, easy living, aging-in-place, storm resistance, energy efficiency, green living, more things-to-do and an increased potential for appreciation.
  • These are The Shores on South Padre and Cinnamon Shore on Port Aransas. Both of these new developments continued to prosper even during the recession and are transforming the Texas coast with new resort destinations.
  • While Galveston suffered from both the recession and Hurricane Ike, one project stood out - offering extraordinary value from a significant capital investment to re-create the project while keeping the same prices, this project also continued to do well despite all the local the market issues. The Dawn Beach condos.
Contact us for a free-no-obligation top picks list and/or evaluation of any potential purchase you may be considering on the Texas coast and how the tax credit could provide you the best buying opportunity this century.

The New IRS First-Time Homebuyer Credit

Updated Nov. 17, 2009 - New Legislation

New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:
  • * Extends deadlines for purchasing and closing on a home.
  • * Authorizes the credit for long-time homeowners buying a replacement principal residence.
  • * Raises the income limitations for homeowners claiming the credit.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010.
  • For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.

Several new restrictions apply to homes purchased after Nov. 6, 2009.
  • * Purchasers must attach a properly executed settlement statement to their return.
  • * No credit is available if the purchase price of the home exceeds $800,000.
  • * The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.
  • * A dependent is not eligible for the credit.
  • * The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.
Additionally, there are new benefits for members of the military and certain other federal employees:
  • * Members of the uniformed services, members of the Foreign Service and employees of the intelligence community serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the 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.
Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:
  • * Applies only to homes used as a taxpayer's principal residence.
  • * Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
  • * Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return.

Related Information
Check out our market stats for recovery data on the Texas coast.
Read about South Padre Island's remarkable recovery stats

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