On November 6, 2009, the Worker, Homeownership and Business Assistance Act of 2009 was signed into law, which extended and expanded the first-time homebuyer tax credit (hereinafter “credit”) for members of the military, members of the Foreign Service, employees of the Intelligence Community, and their spouses serving outside the United States for at least 90 days between January 1, 2009 and April 30, 2010, an additional year to qualify for the credit has been granted.
However, the law does not require both spouses to be overseas in order to qualify for the credit, only one spouse must be on official extended duty overseas for the required amount of time in order to be eligible. In addition to the overseas service requirement, the law also requires that a contract to purchase a principal residence in the United States must be entered into on or before April 30, 2011, and settlement must occur on or before June 30, 2011.
There is no restriction in the type of loan entered into for the purchase, as the credit can be utilized on all types of loans, including FHA, VA or conventional loans. Finally, the law requires that certain income levels be met in order to qualify for the credit. In order to receive the full credit, a single individual cannot make more than $125,000 per year, and married couples are capped at $225,000 per year.
However, it is possible to receive a partial credit for single individuals making no more than $145,000 per year, and married couples cannot make more than $245,000 per year.
If you enter into a contract or settle on your principal residence on or before April 30, 2011, you can claim the tax credit on your 2010 IRS return. The law does not permit you to claim the credit on your 2009 IRS return. If you take out an FHA, VA or conventional loan and settle on your principal residence in 2011, you have the option of claiming the credit on your 2010 or 2011 IRS return.