The Senate voted by a 98-0 margin to extend the First-Time Homebuyer Tax Credit while also expanding the credit to existing homeowners who want to move to another residence.
The refundable credit, which was included in the financial stimulus package in February, was set to expire at the end of November. But the real estate, mortgage and construction industries had pushed for an extension of the credit beyond the deadline. The new legislation extends the maximum $8,000 tax credit for first-time homeowners to April 30, 2010. It also includes a maximum $6,500 tax credit for existing homeowners who want to purchase a new abode. However, they need to have lived in their current home for five consecutive years within the past eight years.
The level of qualifying income has also been expanded, allowing individual taxpayers who make up to $125,000 and joint filers earning up to $225,000 to qualify. The earlier credit had been limited to individuals earning up to $75,000 and couples earning up to $150,000.
A smaller credit would also be available to individuals who make up to $145,000 and couples who earn up to $245,000.
Tax credits could be claimed for homes that cost up to $800,000.
The credit would be extended for an additional year for members of the armed forces who are away from home on extended duty.
To safeguard against the reports of rampant fraud in the program, with even four-year-olds allegedly claiming the credit, the bill adds an age requirement and requires corroborating information to be filed with a return claiming the credit. The bill also gives the IRS greater authority to deny the credit based on information reported by the taxpayer on prior-year returns.
The Senate bill also extends unemployment benefits for 14 weeks. The 27 states with unemployment rates of 8.5 percent or higher would gain an extra six weeks on top of that, but all states would be eligible for the 14 weeks of extended benefits.
In addition, the same bill includes several corporate tax provisions concerning net operating losses. It allows business losses incurred in 2008 or 2009 to be used to recoup taxes paid in prior five years. Taxpayers can use 100 percent of such losses to carry back to prior years. Losses carried back to the fifth prior year are limited to offsetting only 50 percent of that years income.
The tax breaks are paid for with several business tax increases. The bill delays the implementation of worldwide allocation of interest by seven years. It also increases the penalties for failure to file partnership and S Corporation returns from $89 to $195.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access