*The tax credit phases out for homebuyers with incomes in the partial credit range. Homebuyers with incomes above the upper limit do not qualify for the credit.

The higher income limits only apply to homes bought on or after November 7, 2009. If you bought a home before November 7, 2009 and did not qualify for the tax credit because of your income, you cannot claim the credit based on the higher income limits.

The non-first-time homebuyer tax credit is a refundable federal tax credit for current and former homeowners who do not meet the first-time homebuyer requirements. To qualify, you must have owned and lived in your previous home for at least five consecutive years of the eight years before the purchase. The tax credit equals 10% of the purchase price, up to a maximum of $6500 ($3250 each if married filing separately).

You can claim the credit if you buy a home after November 6, 2009, sign a binding sales contract before May 1, 2010, and close before July 1, 2010. Your new home does not have to cost more than your previous home. You do not have to sell your previous home to be eligible for the tax credit, but you must live in your new home as your principal residence for at least three years.

To be eligible for the non-first-time homebuyer tax credit, you must meet all of the first-time homebuyer eligibility requirements except for the rules about previous homeownership and purchase dates. In place of those rules, you must:

• have owned and lived in your previous home as your principal residence for at least five consecutive years of the eight years before the purchase
• buy a single-family principal residence in the U.S. after November 6, 2009, sign a binding sales contract before May 1, 2010, and close before July 1, 2010.

People serving in the military on extended duty outside the U.S. for 90 days or more have an extra year, through June 2011, to buy a house and claim the tax credit.

You do not get the tax credit when you close on your house. You get the tax credit when you file your federal income taxes for the year 2008, 2009, or 2010, depending on when you buy your home.

For homes bought in 2008, you claim the credit on your 2008 tax return or amended 2008 tax return.

For homes bought in 2009, you can:

• claim the credit on your 2009 tax return
• file an amended 2008 tax return to claim the credit

For homes bought in 2010, you can:

• claim the credit on your 2009 tax return filed by April 15, 2010
• file an amended 2009 tax return to claim the credit
• or claim the credit on your 2010 tax return

Eligible homebuyers with MassHousing mortgages can borrow against the tax credit without interest to pay their down payment or closing costs.

The 2008-2009-2010 homebuyer tax credits are refundable credits that can lower the amount of federal income taxes you owe or give you a cash payment:

• If your credit is less than you owe in taxes, the credit lowers your tax liability dollar for dollar
• If your credit is more than you owe in taxes, the government pays you the difference
• If you do not owe any federal income tax, the government pays you the full credit amount

You must file a federal income tax return to get the credit, even if you don’t owe any income taxes.

If the tax credit is for a home you bought in 2008, you must pay back the credit. If the credit is for a home you bought in 2009 or 2010, you do not have to pay back the credit in most cases.

• 2008 Homebuyer tax credit: You must start paying back the credit two years after the year you bought the house. You pay back the credit over a 15-year period as an additional tax on your tax return. If you claim a $7500 credit, for example, you must pay back about $500 per year. Note: The tax credit is basically a 15-year interest-free loan from the government.If you stop living in the house as your primary residence, or if you sell the house before the 15-year repayment period is over, you must pay back the balance of the tax credit in full. In special situations, you do not have to pay back the full amount (for example if you do not make enough profit from the sale of the house to pay back the credit, or if the taxpayer dies).
• 2009-2010 Homebuyer tax credit: You do not have to pay back the credit as long as you own and live in the home as your principal residence for at least three years. If you sell the home before the three years are up, you must pay back the entire credit.

• Property tax deduction:For the property tax deduction for homeowners who do not itemize, you enter the increased standard deduction on federal tax Form 1040 or Form 1040A. You do not file a special form.The instructions for Forms 1040 and 1040A include a Standard Deduction Worksheet so you can calculate your standard deduction with the property tax deduction included.
• First-time Homebuyer Credit:To claim the First Time Homebuyer Credit, you must file Form 5405 with your federal tax return. You can get a copy of Form 5405:
  • by downloading the form from the IRS web site:
    Form 5405 - First-Time Homebuyer Credit (PDF)
    Form 5405 Instructions
  • or by calling the IRS at 1-800-829-3676 and asking them to mail Form 5405 to you

  Important! If you are claiming the homebuyer tax credit on an original or amended 2009 tax return (or later), you may not file your tax return electronically. You must attach a copy of your settlement statement or other proof of purchase according to the Form 5405 Instructions and mail your tax return with Form 5405 to the IRS.

  For more information about how to get the Homebuyer Tax Credit, see How to Get the Extended Home Buyer Tax Credit and How to Get the 2009 First-Time Home Buyer Tax Credit on the National Association of Realtors® web site.

  To check the status of your refund, go to Get Refund Status on the IRS web site.

Useful links

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1. The Basics: Extended Home Buyer Tax Credit 2009/2010
   Detailed information about the extended homebuyer tax credit, including How to Get the Extended Home Buyer Tax Credit, from the National Association of Realtors®.
2. Home Buyer Tax Credits
   Answers to frequently asked questions about the first-time homebuyer tax credit and the repeat buyer tax credit. From the National Association of Home Builders.
3. First-Time Homebuyer Tax Credit and First-Time Homebuyer Credit: Answers
   Information about the 2008 and 2009 homebuyer tax credit, including which home purchases qualify, the amount of the credit, income limits, who cannot take the credit, and how the credit must be repaid. From the IRS.
4. In-Depth: 2009 First-Time Home Buyer Tax Credit and American Recovery and Reinvestment Act of 2009
   Information about the 2009 first-time homebuyer credit and other housing-related provisions of the 2009 economic stimulus package. Includes Comparison of the 2008 and 2009 first-time homebuyer tax credits. From the National Association of Realtors®.