If you signed a home purchase contract by April 30 and were expecting to claim a first-time homebuyer credit, but were unable to close on the purchase by the June 30 deadline, I have good news for you.
The recently-enacted Homebuyer Assistance and Improvement Act of 2010 allows you an extra three months, until September 30, to complete your purchase and qualify for the credit. Here's what you need to know.
Under the first-time homebuyer credit, taxpayers who haven't owned a main home for three years can get a refundable credit of up to $8,000 for buying a new main home (not a second home or vacation home).
Those who aren't first-time homebuyers but were long-time owners and residents of the same main home for five out of the last eight years can qualify for a credit of up to $6,500 for buying a new main home.
The credit expired on April 30, 2010. However, if you signed a binding home-purchase contract on or before April 30, you could still qualify if you closed on the purchase before June 30.
A flurry of last-minute purchases made it difficult for homebuyers to get a mortgage by the June 30 deadline. So Congress stepped in to postpone the closing deadline by three months.
This relief applies only to homebuyers who signed a purchase contract by April 30. They now have until September 30 to close on the purchase and qualify for the credit. Homebuyers who went to contract after April 30 can't claim the credit.
If you made a qualifying home purchase in 2010, you can claim the credit on your 2009 return—either your original return if you are filing on extension or an amended return if you've already filed for 2009.
Claiming the credit on a 2009 return is usually preferable, because you will get your refund sooner. However, in some cases you will be better off taking the credit in 2010.
In either case, you must file a paper return, not an electronic one, and must attach specific documentation to the return. Your tax return preparer should be able to help you file the appropriate documentation.