The current $8,000 first-time home buyer tax credit is scheduled to end on November 30, 2009. There is an amendment sponsored by Sen. Johnny Isakson (R-GA) scheduled to be attached to Senate legislation extending unemployment compensation that would create an expanded version of the tax credit.
The new version would allow all home buyers (not just first-time buyers) who earn less than $150,000 as individuals and $300,000 as married couples to receive up to $8,000 as a tax credit. The cost of the new version of the tax credit is nearly $17 billion. The new tax credit would run through June 30, 2010.
As we went to press, Shaun Donovan, Secretary of the Department of Housing and Urban Development, told the Senate Banking Committee that the White House hadn’t make a decision on extending the tax credit and was looking at the costs.
In the meantime, home buyers continue to ask a lot of questions about how to apply the current tax credit.
Q: My daughter, who is a U.S. citizen, has lived in a foreign country for the past 23 years. So one could say her primary residence is not in the U.S. She and her husband recently purchased a home in the U.S. which will be used as a rental property. Will she be able to claim the first time home buyer tax credit?
A: Unfortunately, the $8,000 first time home buyer tax credit (in its current incarnation) is only available for individuals who have not owned a home during the last three years and intend on using the purchased home as a primary residence.
Since your daughter intends on using the home as a rental, it will not qualify for the tax credit.
By the way, although the $8,000 tax credit has not yet been extended beyond its current sunset date of November 30, the new version being proposed does not provide a tax credit for investment property. It is only for those who are buying a home to live in.