Real Estate Information Archive

The IRS has published an update to the rules for the repeat-purchase credit, with additional details for taxpayers that had been missing since it's November 6, 2009 passage. Hope this helps those considering a Charlotte home purchase.

To qualify, buyers must meet the following requirements:.

1. Owners of existing homes, specifically, taxpayers who have occupied the same property as a principal residence for 5 consecutive years during the previous 8 years, may now be able to claim a tax credit on a purchase of another home they intend to use as their principal residence.
2. The credit is for up to 10% of the price of the replacement home, capped at $6,500. The home must be placed under contract by April 30, 2010, and the closing must occur no later than June 30, 2010.
3. Members of the armed forces and federal diplomatic and intelligence personnel stationed overseas get one extra year to claim their credit.
4. The maximum purchase price on houses eligible for the credit is $800,000.
5. Purchasers are not required to sell their previous house, but they must be able to demonstrate that the replacement home is or will be their primary residence.
6. A copy of the signed HUD-1 settlement sheet, including the contract sale price and the date of closing. This is to document that the timing of the transaction meets the program's requirements.
7. Evidence of long-term ownership and occupancy of the previous home to meet the 5-consecutive-years requirement. This can be property tax records, homeowner's insurance records or IRS Form 1098 mortgage interest statements for the 5-year period.
8. For buyers claiming a credit on a newly constructed home, for which a HUD-1 settlement sheet is not available, the IRS will accept a copy of the certificate of occupancy showing the purchasers' names, the property address and the date.
9. Your modified adjusted gross income (AGI) must be $125,000 or less if you are single, $225,000 or less if you are married and filing jointly. Above these limits, the allowable credit amount begins to phase down in increments and is eliminated once incomes hit $145,000 for singles and $245,000 for married joint filers.

Be aware, you may have to repay the credit to the government if you sell your new home within 36 months after purchase, convert it to a rental or business property, or if your lender forecloses on the new house.

Lawmakers are pushing to revive legislation in the Senate that would almost double an $8,000 tax credit for first-time homebuyers and expand the program to all borrowers. A group introduced a bill today that would increase the tax credit to $15,000 and remove income and other restrictions on who can qualify.

The legislation would extend the homebuyer credit to multifamily properties used as the borrower's primary residence. It would also eliminate income caps of $75,000 and $150,000 on individuals and couples seeking to claim the credit.

The Business Roundtable and the National Association of Realtors are pushing to expand the tax credit and to lower mortgage rates to revive the U.S. housing market. The proposed bill would extend the credit, which now applies to homes purchased from Jan. 1 to Dec. 1, 2009, to one year after the new measure is signed into law. It would make the credit available to all borrowers, not only borrowers who haven't owned a home in the previous three years as is the case under current law. It would also let borrowers divide the credit over two years. The legislation wouldn't be applied retroactively to purchases completed before the date of enactment.