IRS outlines how to claim first-time homebuyer credit

If you are in the market for a new home, you may still be able to claim the first-time homebuyer credit.

Congress recently passed the Worker, Homeownership and Business Assistance Act Of 2009, extending the first-time homebuyer credit and expanding who qualifies.

Here are 10 things to know about the expanded credit and the qualifications you must meet in order to qualify for it.

• You must buy — or enter into a binding contract to buy a principal residence — on or before April 30.

• If you enter into a binding contract by April 30, you must close on the home on or before June 30.

• For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.

• A longtime resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you've lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after Nov. 6, 2009.

• The maximum credit for longtime residents is $6,500. However, married individuals filing separately are limited to $3,250.

• People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after Nov. 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.

• The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after Nov. 6, 2009 — whether the credit is claimed for 2008 or for 2009 — and for all home purchases that are claimed on 2009 returns.

• No credit is available if the purchase price of the home exceeds $800,000.

• The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.

• A dependent is not eligible to claim the credit.

For more information about the expanded First-Time Home Buyer Credit, go to www.irs.gov/recovery.