Everybody else must buy a home by the April 30, 2010 deadline to qualify for the credit, worth as much as $8,000.
The latest update of the homebuyer credit actually has two versions. There’s the First-Time Homebuyer credit of up to $8,000 on your tax return if you purchase a home and hadn’t previously owned one in three years. There’s also a credit up to $6,500 for “long time” homebuyers – who owned and lived in a home for five consecutive years out of the past eight, prior to purchasing the replacement home. You do have to pay back the credit if you sell or leave that new home within 36 months after purchase. For more information, check out How to Qualify for the Homebuyer Credit Extended into 2010.
What are the details on the extended date for the military?
Members of the military and certain other federal employees serving outside the United State get an extra year to purchase a residence in the U.S. and receive the credit. The date has been extended to April 30, 2011. This extended date applies to members who serve on official extended duty outside of the United State for at least 90 days during the period beginning after December 31, 2008 and ending before May 1, 2010.
Here are a couple of examples:
- Joe, an Army officer, is stationed in Germany from June 1, 2009 until February 1, 2010. Since he was stationed outside the US for more than 90 days, after 12/31/08 and before 5/1/10, he has until April 30, 2011 to purchase a new home in the US and if eligible, receive the credit.
- Susan is in the Navy and stationed in Japan from March 1, 2008 until March 1, 2009. She won’t get the extra year to purchase a home because she didn’t meet the 90 days rule.
More good news
If you’ve received the credit, but due to an official move and you have to leave/sell the home, you won’t have to repay the money.
What are the situations that the credit doesn’t have to be repaid?
If the taxpayer sells or stops using the home as a principal residence within 36 months after purchase, the credit is repaid. However for service members who sell or stop using their home as a principal residence in connection with government orders received for “qualified extended duty service,” the credit does not have to be repaid. The “qualified extended duty service” is a defined as a period of duty (in excess of 90 days or an indefinite period of time) while serving at a place of duty at least 50 miles away from the principal residence.
Here’s an example. Larry is in the Air Force and was stationed overseas from May 1, 2009 until February 5, 2010 Starting in March, 2010, he is stationed in Washington, D.C. He decides to purchase his first home in February, 2011 and qualifies for the $8,000 credit on his tax return.
In November, 2011 he receives orders to California. He decides to rent out the house and move into government quarters in California. Even though he’s been in the house less than a year, he doesn’t have to pay back the credit to the IRS.
For more information on the military and taxes: