Michael Gray, CPA's Tax and Business Insight

Supplemental Information

March 6, 2009

© 2009 by Michael C. Gray

ISSN 1539-395X

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More on First-Time Homebuyer Credit

Lawrence Allgood of First American Title asked me to tell our readers more about the limitations that apply for the First-Time Homebuyer Credit, increased to $8,000 ($4,000 for married, filing a separate return) from January 1, to November 30, 2009.

The credit will be recaptured if, within 36 months after the purchase, the taxpayer disposes of the home, or the taxpayer (and spouse, if married) ceases to use the home as a principal residence. So, if the taxpayer moves to another residence and keeps the residence for which the credit was claimed as a second home or converts it to a rental within three years of buying the home, the credit is recaptured.

Since the credit is phased out for single persons with adjusted gross income over $75,000 and for married persons filing jointly with adjusted gross income over $150,000, most of our clients will be ineligible for the credit.

Bear in mind I was giving some highlights of the new tax laws. It was very difficult for me to get a March newsletter out this year. Since President Obama just signed the stimulus legislation on February 17, a lot of the details remain to be released, including hard copy references for tax advisors.

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.