Tax Credit Bill

Congress just expanded two key tax breaks
as part of a law extending unemployment benefits.
We will report on the changes in detail for you.
Start with the first time home buyers’ credit:
It is now extended through April 30, 2010
and won’t lapse on Nov. 30 as previously scheduled.
Binding sales contracts signed by April 30, 2010
must close by June 30, 2010 to qualify for the credit.
Congress is unlikely to OK any further extensions.
More higher-incomers can now claim it.
For homes purchased after Nov. 6, married couples
can claim the full $8,000 tax credit (assuming that the home cost $80,000 or more)
if their adjusted gross income is $225,000 or less, up from $150,000 previously.
For them the credit phases out over the next $20,000 of AGI and ends at $245,000.
The phaseout for singles starts at $125,000, up by $50,000, and ends at $145,000.
Even current homeowners can use this break. Those who’ve owned a home
for five consecutive years out of the last eight qualify for a tax credit of up to $6,500
if they go out and purchase another home after Nov. 6, 2009 and before May 1, 2010.
As with the first-timers’ credit, the house must be the buyer’s principal residence.
Buyers can claim qualifying 2009 purchases on amended 2008 returns.
Credits for 2010 purchases can go on 2009 returns. The credit remains refundable.
But there are some tightenings: Homes costing over $800,000 don’t qualify
for either the $8,000 or $6,500 tax credit if they were purchased after Nov. 6, 2009.
No credit is allowed for purchasing a home after Nov. 6 from your in-laws.
That shuts a loophole in the rules barring the credit for homes bought from relatives.
Dependents cannot claim the credit. Nor can taxpayers under age 18.
And more documentation is required to claim the credit. Filers must attach
a signed copy of the settlement statement to their tax returns or claims for refund.