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Well, they did it again.  The Federal government has gone and extended the homebuyer tax credit until April 30, 2010.  In addition, they made some changes that allow a tax credit for some current homeowners as well.

The Worker, Home-ownership, and Business Assistance Act of 2009, which was passed on November 6, 2009:

• Extends the allowable period for a qualifying home purchase to homes that are under contract no later than April 30, 2010, with the buyer having until June 30, 2010 to close on the home to qualify for the tax credit-Of course, they could have just said that you had to close by June 30th.  Why they throw in the stipulation that you have to be under contract two months before doesn’t really make sense to me.
  
• Includes a “long-time resident” credit of up to $6,500 to homebuyers that do not qualify as first-time homebuyers under the $8,000 credit rules.  To qualify, these homebuyers must have owned and used the same home as a primary residence for at least five consecutive years of the eight-year period ending on the date of  the new home purchase.-Again with the nit-picky rules.  Why can’t they just give everyone the credit at the lower amount if they are still buying a home?  They seem very eager to give away money, they just make people jump through hoops to get it.
• Raises income limits for people who purchase homes after November 6, 2009.  The full credit will be available to single individuals with modified adjusted gross incomes of up to $125,000 (previously $75,000) and joint filers with modified adjusted gross incomes of up to $225, 000 (previously $150,000).-Of course, those of you that read my first post about the tax credit remember the silly $20,000 income phase-out rules.  If you earn in excess of $20,000 more than the allowable limits ($145,000 for single filers, $245,000 for joint), then you get $0!!!  Again this is what I call fuzzy math.  As a single person, you can earn $20,000 more and still get some of the credit, but as a couple, you can only earn $20,000 more as well without losing the credit.  Shouldn’t it be $40,000, since there are two people?

For all qualifying purchases in 2010, taxpayers have the option of claiming the tax credit on either their 2009 or their 2010 tax return.  Unfortunately though, since this is such new legislation, the Internal Revenue Service needed to amend the form that was being used to claim the credit.  They have announced that anyone who claims the credit on their 2009 tax return will not be able to e-file, they will need to file through the mail.  Imagine that, since they have to write you a check, you have to mail them your forms and have the process take longer than if you weren’t claiming the credit.  Isn’t it funny how that works?
There are a few new restrictions on purchases that take place after November 6, 2009 including:

• Dependents are not eligible to claim the credit
• No credit is available if the purchase price of a home is more than $800,000
• A purchaser must be 18 years of age on the date of purchase

In conclusion, I still say that if you can take advantage of the free giveaway of taxpayer funds, you should.  The government seems intent on giving away money all over the place because they think it is going to fix the economy.  Now I hear that they are working on a tax credit for buying a new energy efficient dishwasher, refrigerator or other home appliances.  Did they not learn anything from the horrible “Cash for Clunkers” program?  Remember that one, where they told everyone that had an old, paid off car that they could have more money than it was worth to trade it in toward a newer, more energy efficient model?  I heard that it costs over $10,000 per car to get rid of the cars in a green manner.  So…they helped the auto dealers with their sales, but will end up paying more in disposal fees than originally anticipated.

I think they should just send every registered taxpayer a check for $10,000 and be done with it.

Feel free to add your thoughts below.  And of course, remember that if you have a question about this or any other tax matter, you are always free to contact us at (404) 931-9318 or via one of our formats on our contact page.

I look forward to your questions and comments.

Sincerely,

Harry Shurek
Owner
Shurek Accounting & Tax