Expanded Limits and Tax Credits for Military Homebuyers

Veterans have always enjoyed the benefits of a VA home loan, which has meant the lowest fixed-rate mortgages, no downpayment, support for closing costs and more. The VA mortgage program has opened doors to homeownership for countless military families and veterans.

And while there are certain limits to VA benefits, expanded homebuyer tax credits and more inclusive eligibility have in effect served to expand those limits. For example, whether you're veteran, on active duty or a civilian, the best time to buy a new home could be now, or anytime through April 2010, thanks to the Worker, Homeownership and Business Assistance Act of 2009. Signed into law on Nov. 6, 2009, the Worker, Homeownership and Business Assistance Act of 2009 makes the popular First-Time Homebuyer Tax Credit more accessible to a variety of homebuyers.

2008 HOMEBUYERS TAX CREDIT APPLIES TIL 2010

In 2008, the Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan that needs to be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

TAX CREDIT FOR 2009 HOME PURCHASES

The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For a home purchased in 2009, the credit does not have to be paid back unless the home ceases to be your main residence within a three-year period following the purchase.


WORKER, HOMEOWNERSHIP, BUSINESS ASSISTANCE ACT

The Worker, Homeownership and Business Assistance Act of 2009 extended the tax-credit deadline: if you have a binding contract to purchase a home before May 1, 2010, you are eligible for the first-time homebuyer credit, provided you close on the home before July 1, 2010.


In fact, the expanded Worker, Homeownership and Business Assistance Act of 2009 offers more of a good thing, including:

-- Extended deadlines for purchasing and closing on a home

-- Credit for long-time homeowners buying a replacement principal residence

-- Increased income limitations for homeowners claiming the tax credit


Under the new Worker, Homeownership and Business Assistance Act of 2009, you must buy, or enter into a binding contract to buy, a principal residence `til April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the new tax credit on either your 2009 or 2010 tax returns.


TAX CREDIT FOR REPLACEMENT HOMES

Maybe you sold your home before a PCS, and now you're considering buying a new home.

The expanded Worker, Homeownership and Business Assistance Act of 2009 offers good news for you too: for the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). You must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

HOMEBUYER CREDIT EXPANDS INCOME LIMITS

People with higher incomes can now qualify for the tax credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing modified adjusted gross income phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.