 Baylake
Bank Offers Information About Homebuyer Tax Credit Changes
November 17, 2009 -- The new
Worker, Homeownership, and Business Assistance Act of 2009 that was
recently signed into law includes an extension of first-time homebuyer
credit as well as several other tax payer opportunities. The first-time
home buyer credit was previously scheduled to expire on December 1,
2009, but the new law extends the date to April 30, 2010.
• A significant change from the previous law is that the new one
provides a credit for existing homeowners who buy a home after November
6, 2009. The credit equals the lesser of $6,500, or 10% of the price of
the replacement home, or $3,250 for a buyer who uses married filing
separate status. To qualify, the buyer must have owned and used the same
home as a principal residence for at least five consecutive years during
the eight-year period ending on the purchase date for the replacement
principal residence. If you’re married, your spouse must pass this test
too (whether or not you file jointly).
• The home buyer credit is phased out (reduced or completely eliminated)
as income goes up. However, the new law significantly raises the
phase-out ranges so that many more higher-income buyers will now
qualify. For purchases after November 6, 2009, the phase-out range for
unmarried individuals and married couples who file separately is between
modified adjusted gross income (MAGI) of $125,000 and $145,000 (up from
the old-law range of $75,000-$95,000); the phase-out range for married
joint filers is now between MAGI of $225,000 and $245,000 (up from the
previous range of $150,000-$170,000). The credit can only be claimed for
a principal residence that costs $800,000 or less.
• Also for purchases after November 6, the homebuyer must be at least 18
years old on the purchase date to qualify for the credit, and no credit
is allowed for a buyer who can be claimed as a dependent on someone
else’s tax returns for the year of the purchase. These new rules are
intended to prevent buyers who really don’t have incomes of their own
(like college students who use money from their parents to buy a home
near campus) from claiming the credit.
• For credits claimed on 2009 and 2010 tax returns, buyers must attach a
properly executed real estate settlement sheet to the return. Also, the
IRS can now disallow credits in questionable circumstances (like when it
appears the $8,000 credit is being claimed by someone who already owns a
home).
• The new law enables homeowners to claim the credit for a 2009 purchase
on 2008 tax returns, or to claim the credit for a 2010 purchase on 2009
Form 1040. This allows you to cash in on the credit sooner rather than
later, and it may also allow you to claim a larger credit if your income
in the year of purchase is higher than in the preceding year.
• For military service members on extended duty outside the U.S., the
new law lengthens the deadline for closing on home purchases for an
extra year, to April 30, 2011 (or June 30, 2011 for homes under contract
on April 30, 2011). The new law also waives the credit repayment rules
for service members who are forced to move due to new orders. The same
special rules apply to members of the foreign service and intelligence
communities.
Source: www.SmartMoney.com
For more information, contact a
Baylake Bank Mortgage Lender at
(920) 743-5551 or 1-800-267-3610.
  Baylake
Bank, Member FDIC/Equal Housing Lender, serves its communities from 28
financial centers in Brown, Door, Green Lake, Kewaunee, Manitowoc,
Outagamie, Waupaca, and Waushara counties and from its website at
www.baylake.com.
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