Home Buyers Get a Bigger Break
First-time buyers get more time to qualify for a tax credit, and homeowners who trade up can claim a credit, too.
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Newsletter sign up Newsletter
The home-buyer tax credit isn't just for first-timers anymore. Congress opened the door to existing homeowners who want to buy a new home and agreed to raise the income-eligibility limits so that more people could take advantage of the popular tax break. Plus, lawmakers extended the first-time-buyer credit, which was due to expire November 30, through next spring.
To qualify for a tax credit, eligible home buyers have until April 30, 2010, to sign a binding contract, and they must close the deal before July 1. First-time buyers, defined as purchasers who have not owned a home in the previous three years, can claim a tax credit for 10% of the value of the house, up to a maximum of $8,000. And now those who have owned a house for at least five consecutive years out of the past eight and who are in the market for a new one may be eligible for a tax credit of up to $6,500.
Do you qualify? Income-eligibility limits for both credits are higher than the caps that applied to the earlier first-time-buyer credit. For single taxpayers and heads of household, the credit begins to phase out at $125,000 of income and disappears at $145,000. For married couples, the credit starts to phase out at $225,000 and disappears at $245,000.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The credit applies only to primary residences, not second homes, and the property value may not exceed $800,000. Members of the military serving outside the U.S. for at least 90 days can take advantage of the credit until June 30, 2011.
First-time home buyers who closed on their homes before November 7 are restricted to lower income thresholds of $75,000 (phasing out at $95,000) for individuals and $150,000 (disappearing at $170,000) for married couples. Existing homeowners who closed the deals on their new homes before November 7 are out of luck.
If you close on your home by December 31, 2009, you can file an amended 2008 tax return (Form 1040-X) for an immediate tax refund. If you close the deal between January 1 and April 15, 2010, you can claim the credit on your 2009 return. For later sales, file an amended 2009 return.
-
-
Fed Raises Interest Rates Yet Again: What the Experts Are Saying
Federal Reserve The Fed's quarter-point rate hike was welcomed by the market and market pros, alike.
By Dan Burrows • Published
-
Stock Market Today: Stocks Swing Higher After Powell Presser
The Fed raised rates by 0.25%, as expected, and Powell promised to "stay the course until the job is done."
By Karee Venema • Published
-
Best Foreclosure Sites for Finding Properties
Making Your Money Last Wondering how to find foreclosed homes for sale for your next residence or to flip for a profit? These websites will guide you to foreclosures and real estate owned properties to buy.
By Bob Niedt • Last updated
-
How to Shop for a Low Mortgage Rate
Becoming a Homeowner Rates are higher this year, but you can still find an affordable loan.
By Daniel Bortz • Published
-
Looking to Relocate? Plan for Climate Change
buying a home Extreme weather events are on the rise. If you’re moving, make sure your new home is protected from climate change disasters.
By Rivan V. Stinson • Published
-
Retirees, A Healthy Condo Has a Flush Reserve Fund
Smart Buying Reserve funds for a third of homeowner and condo associations have insufficient cash, experts say. Here are some cautionary steps you should take.
By Patricia Mertz Esswein • Published
-
Cash Home Buyers: New Services Offer Help Making All-Cash Offers
Becoming a Homeowner Some firms help home buyers make all-cash offers on homes. Weigh the fees before you sign on.
By Emma Patch • Published
-
Home Sale Prices in the 50 Largest Metro Areas
Becoming a Homeowner What’s happening in the market where you live?
By the editors of Kiplinger's Personal Finance • Published
-
How Much Will Home Prices Continue to Rise in 2022?
Becoming a Homeowner It’s still a seller’s market, but higher mortgage rates will slow the torrid price increases. Know how to be a smart buyer or seller in these conditions.
By Daniel Bortz • Published
-
Conforming Mortgage Loan Limits Rising
Becoming a Homeowner For 2022, the standard conforming limit for single-unit properties is $647,200, up nearly $100,000 from the 2021 cap.
By Lisa Gerstner • Published