IRS provides guidance on "repeat" homebuyers for new $6,500 tax credit

The IRS recently posted new guidance in the form of updated frequently asked questions (FAQs) on its web site about the first-time homebuyer credit. The Worker, Homebuyer and Business Assistance Act of 2009 (2009 Worker Act) provides a temporary $6,500 tax credit to "repeat" homebuyers. To qualify for this reduced credit, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you buy the new principal residence. Income limits do apply, however.

Repeat homebuyers

A repeat homebuyer does not have to sell or otherwise dispose of his or her current residence in order to qualify for the reduced $6,500 credit. However, the purchased residence for which the taxpayer claims the credit must be his or her new principal residence. There is also no requirement that the new principal residence be a "move up" property; it can be less or more expensive then the taxpayer’s former home. The credit cannot be claimed if the new home’s cost exceeds $800,000.

Homes abroad and RVs

If you have owned a home outside the U.S. or owned and lived in a recreational vehicle (RV) you should qualify for the credit. The updated FAQs clarify that an RV with a built-in motor is personal property and a residence outside the U.S. does not count as a prior residence for purposes of the credit.

Our office will keep you informed of future guidance on the new and expanded first-time homebuyer credit.