Extended Homebuyer Tax Credit

For Iowans looking at buying their first home or qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence between November 7, 2009 and on or before April 30, 2010.

Details of the tax credit include: 

  • 30343954The First Time Homebuyer Tax Credit of 2009 has extended the tax credit of up to $8,000 for qualified first-time homebuyers purchasing a principal residence. For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.
  • A tax credit of up to $6,500 for qualified move-up/repeat homebuyers (existing home owners, who have used the home as a principal residence consecutively for 5 of the previous 8 years) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010.
  • Buyers claim the credit on their federal income tax return to reduce their tax liability. If the credit is more than their total tax liability that year, the buyer will get a refund check for the balance.
To claim your benefit:

Close on a new principal residence between Nov. 7, 2009, and April 30, 2010. You can settle as late as June 30, 2010, as long as you have a binding contract by April 30.

Don’t spend more than $800,000 on your new home.

When you submit your tax return, attach a copy of the settlement statement you received at closing. Check with the IRS or your tax adviser to confirm what additional documentation may be needed.

Decide whether to:

  • Apply the credit to your 2009 tax return, filed on or before April 15, 2010
  • File an amended 2009 return
  • Apply the credit on your 2010 return, filed on or before April 15, 2011

First-time homebuyers who purchased a home between Jan. 1, 2009, and Nov. 6, 2009, may also be eligible for the $8,000. Keep in mind that the income limits in this case are tighter than for those who purchased after Nov. 6.

To claim the credit on your 2009 tax return:

  • Complete IRS Form 5405 (pdf) to determine the amount of your available credit
  • Apply the credit when you file your 2009 tax return or file an amended return
  • Attach documentation of purchase to your return or amended return

Which properties are eligible?

Eligible properties include anything that will be used as a principal single-family residence including condos and townhouses will qualify for the credit, provided that the home is purchased for a price less than or equal to $800,000.

Do I need to repay the tax credit?

The tax credit does not have to be repaid if the buyer stays in the home for three years or more. However, if the property is sold during this three-year period, the full credit amount will be recouped on the sale.

Consult with a REALTOR® to learn more about the tax credits and state and federal loan programs.