Modified homebuyer credit may make now the best time for pastors to make a move.
by Richard R. Hammar
Under prior law, a taxpayer who was a first-time homebuyer was allowed a refundable tax credit equal to the lesser of $7,500 or 10 percent of the purchase price of a principal residence. The credit was allowed for qualifying home purchases on or after April 9, 2008 and before July 1, 2009 (without regard to whether there was a binding contract to purchase prior to April 9, 2008). The credit phased out for taxpayers with modified adjusted gross income between $75,000 and $95,000 ($150,000 and $170,000 for joint filers) for the year of purchase. A taxpayer is considered a first-time homebuyer if he or she had no ownership interest in a principal residence in the United States during the three-year period prior to the purchase of the home to which the credit applies.
The credit was recaptured ratably over 15 years with no interest charge beginning in the second taxable year after the taxable year in which the home is purchased. For example, if the taxpayer purchased a home in 2008, the credit was allowed on the 2008 tax return, and repayments began with the 2010 tax return. If the taxpayer sold the home (or the home ceased to be used as the principal residence of the taxpayer or the taxpayer's spouse) prior to complete repayment of the credit, any remaining credit repayment amount was due on the tax return for the year in which the home was sold (or ceased to be used as the principal residence). However, the credit repayment amount could not exceed the amount of gain from the sale of the residence to an unrelated person.