Military Tax Credit Deadline Nears

By:: Kirk Haverkamp | April 20, 2011

The homebuyer tax credit is long-forgotten by most, but there’s still time to take advantage of it for some members of the military and certain overseas government employees.

You need to act fast, however. The absolute, drop-dead deadline for signing a home sales contract to qualify for the credit is Saturday, April 30 – just 10 days away.

For those who qualify, the credit offers up to an $8,000 federal tax credit – not a deduction, but a refundable tax credit. That means it knocks up to $8,000 right off your federal tax bill, and will even boost your refund if the credit exceeds your tax obligation for the year.

For most homebuyers, the federal tax credit program expired a year ago, when eligibility for most buyers ended. However, Congress extended the deadline for members of the military and other government employees whose overseas service during that time may have made it difficult for them to buy a home stateside.

To qualify, homebuyers must be a member of the military, Foreign Service or intelligence community who served at least 90 days of qualified extended duty abroad between Jan. 1, 2009 and April 30, 2010. Spouses of such persons qualify as well.

First-time homebuyers may qualify for up to the full $8,000 tax credit, while repeat homebuyers can receive up to $6,500. The new home must be used as the buyer’s primary residence and the credit is capped at 10 percent of the purchase price.

The full credit is limited to single taxpayers with incomes of $125,000 or less, or couples earning up to $225,500. The credit is gradually reduced over the next $20,000 of income, and is phased out entirely for single and joint filers with incomes above $145,000 and $245,500, respectively. Certain other restrictions apply as well.

For more information, see the IRS bulletin on the homebuyer tax credit extension at http://www.irs.gov/newsroom/article/0,,id=215594,00.html or contact a mortgage lender or broker.

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