Homebuyer Tax Credit Extension for Military and Overseas Federal Employees

The 2010 Homebuyers Tax Credit’s April deadline has passed for the majority of first-time homebuyers and sellers – but there are some groups still eligible to qualify for the tax break.

If you are a member of the military, the Foreign Service or part of the intelligence community serving outside the US, you can still take the $8000 credit for first time buyers or $6500 credit for sellers and repeat homebuyers for an additional year.

The Original Home Buyers Tax Credit

homebuyer tax credit extensionAfter the Obama Administration extended the original Homebuyer tax credit from November 2009, the new guidelines required qualified purchases to include having a binding sales agreement in place before April 30, 2010 with a closing date set by June 30, 2010. Those who qualified for the tax credit had the option to include it on either their 2009 or 2010 tax forms. Those who did not meet those qualifications are no longer eligible for the tax credit.

Extension Plans

After the April 30th date, many hoped that the plan would be again extended to all people. The housing market was looking up again as so many took advantage of the tax credit and became first time homebuyers. Additionally, people were willing to sell their homes for a credit of $6500, helping the market to restabilize. Individuals that qualified for the credit had the option of claiming the credit on either their 2009 or 2010 return. In light of the better housing circumstances and because the government had more pressing issues to deal with, the extension did not come to pass.

However, those who are in service with the military or are employees of the federal government’s intelligence agencies or a member of the Foreign Service have to option of an extended tax credit. Those who are on extended duty outside of the United States for at least 90 days between December 31, 2008 and ending May 1, 2010. Those who are forced to return to the United States for medical reasons before fulfilling their original duties may qualify for a one year extension.





Extension Requirements

Eligible military or federal employees have an extra year to purchase a home in the US and still qualify for a credit. Contracts must be entered into by April 30, 2011 with a closing date of not later than June 30, 2011. Military and government personnel and their spouses are eligible for the credit if at least one of them has been serving overseas. Homes to be purchased can not exceed $800,000 and purchases must be made by someone at least 18 years of age.

To Claim First Time Homebuyer’s Tax Credit

In order to claim the tax credit, a copy of the properly executed settlement statement is required to be attached to the income tax return and Form 5405 First Time Homebuyer Credit and Repayment of the Credit needs to be completed.

For those who are purchasing new homes or mobile homes and do not receive a settlement statement, the following requirements apply:

  • Mobile homes – who include a copy of the executed retail sales contract showing all parties’ names, property address, purchase price and date of purchase.
  • Newly constructed homes – include a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

For more information about the extension of the Homebuyer Tax Credit, visit the IRS website where you can also download appropriate tax forms.




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Date published: June 14, 2010. Last updated: January 9, 2013.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is currently serving in the IL Air National Guard. He also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google.

Comments

  1. Guy Derouen says:

    My name is Master Sergeant Guy Derouen and I am a U.S. Marine stationed in Okinawa, Japan. My family and I have been here since July 2008 on military orders and will be leaving in July 2011. My question is in regards to qualifying for the First Time Home Buyers Tax Credit. I have conducted research on this topic and I can’t seem to get a straight answer and need clarification. I will be purchasing a home within the time frame before 30 April 2011 (under contract) and 30 June 2011 (close). According to the IRS website I would have had to been overseas for at least 90 days after 31 Dec 2008 and before 1 May 2010. I have been stationed overseas the entire time that this tax credit was available. My question is “Do I qualify for the credit”, as long as I enter into a contract before 30 April 2011 and close before 30 June 2011? If I qualify, can you please provide references? Your assistance would be greatly appreciated.

    Sincerely,
    Master Sergeant Guy Derouen

    • Master Sergeant Derouen, my basic understanding of your situation is that you would qualify for the tax credit based on the information I have read and that you gave. Best of luck with your home purchase, and thanks for your service!

  2. Tamerra Hite says:

    We bought a house in the states in June 2010 while we were still stationed overseas (since 2005). This is the part that is throwing me off: “Those who are on extended duty outside of the United States for at least 90 days between December 31, 2008 and ending May 1, 2010.” The VITA tax guy said we didn’t qualify for the credit because our overseas assignment didn’t end prior to May 1, 2010. Is he right?

    • Thanks for contacting us. To be honest, I’m not sure how the ending date is interpreted for this law. It could be read two ways:

      The first is to interpret the time period for living overseas as a hard start / stop date.

      The second way is to interpret it with a hard start date, and a soft end date – meaning as long as you were stationed overseas for at least 90 days in that time period, you would qualify.

      Unfortunately, I do not know which is the legal interpretation in this instance.

  3. Kailie Meier says:

    We are currently looking at houses in Michigan, but we are stationed in Japan. Our main problem is we will not be out until June and the owner occupancy requires someone to live in the house 60 days after closing, however we are unable to do so. Is there any way to get a letter or something that states we aren’t investors we will be living in the home ourselves? That way we can speed things up and our offer will look better since they want home owners? Your help would be appreciated. Thank you.

    kailie

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