Tips & Special Topics
Military Members and Others get Homebuyer Credit Extension
Added January 7, 2010 | Updated January 8, 2010
The homebuyer’s tax credit of up to $8,000 introduced in the American Recovery and Reinvestment Act of 2009 has been extended until spring of 2010. The extension is even more favorable for certain U.S. military members.
Originally, the $8,000 tax credit was only for qualified first-time home buyers purchasing a primary residence on or after January 1, 2009 and before December 1, 2009. The credit deadline has been extended until spring of 2010 for most, and now includes up to $6,500 for repeat buyers who have lived in their homes for five consecutive years out of the last eight, and are purchaseing the home to be their primary residence.
For military personnel, the credit is extended an additional year to December 1, 2010. And, for those who are serving or have served outside of the United States for at least three months in 2009, they are eligible for the credit as long as the loan is closed by June 30, 2010. The credit extension for military members is honored regardless of whether they used the VA home loan program to finance their homes.
In October 2009, the U.S. House made the credit more flexible for military members in a series of bills known as the "Service Members Home Ownership Act of 2009." As the name implies, these changes in this bill will only affect military personnel in terms of being eligible to take advantage of the credit and other benefits described therein. Separate legislation exists for homebuyer tax credit extension for non-military members.
The legislation for extending the credit for military members passed unanimously. It addressed the stipulation of the First Time Homebuyer's credit, which requires buyers to occupy their homes for three years following the purchase in order to fully qualify for the credit. Obviously, this occupancy guideline presents a hurdle for military personnel fighting in Iraq or Afghanistan, or for those who may be called upon to transfer overseas after purchasing their homes.
With the help of the Act, military personnel who sell their homes within the first 36 months due to transfer to a new duty station or call to duty overseas will not be responsible for repaying the tax credit. Rather, the time they spend away from their homes while serving their country will count toward fulfilling the occupancy requirement.
Many military personnel rent out their homes or simply let them sit vacant, both of which would have caused them to repay the credit they received before the change under the old law. That is no longer the case under the new legislation, which allows more flexibility in owner occupancy for military personnel.
These changes in legislation for military members were the precursor to the extension for non-military homebuyers. For more information about the homebuyer tax credit extension or about VA loans contact a VA mortgage professional.
