Tax Credit Benefits For Military Homebuyers & Sellers

I think it is great that the $8,000 and $6,500 tax credits have added benefits for the military.   Here is a breakdown of how it works:

”Under the Worker, Homeownership and Business Assistance Act, which was signed into law in November, military personnel and certain other federal employees serving outside the country have an extra year to qualify for the $8,000 tax credit offered to first-time buyers and the smaller $6,500 credit available to repeat buyers.

Also, the recapture rule has been waived for members of the uniformed services, members of the foreign service and employees of the intelligence community.

Under the new law, eligible taxpayers must enter into a contract to purchase a principal residence by April 30 and close the transaction no later than June 30. But servicemen and women get an extra 12 months, so they must sign a binding contract by April 30, 2011 and close no more than 90 days later.

The rule applies to individuals or their spouses who serve on qualified official extended-duty service outside the country for at least 90 days between Jan. 1, 2009 and April 30, 2010. According to the IRS, only one spouse need be overseas on official extended duty for the requisite time to qualify.

For most buyers, if the home is sold or otherwise ceases to be used as their principal residence within three years of the initial purchase, the credit must be repaid. But when the home belongs to an eligible member of the armed services, intelligence community or foreign service that provision is waived if the house is sold in connection with orders sending the taxpayer to a new duty station at least 50 miles away.

The new post can be either inside or outside the United States, but the change must be because the taxpayer is under orders to move for a period in excess of 90 days or indefinitely.”