As you may know, the federal First Time Home Buyers credit is expiring soon. In order to be eligible for the credit, you must have a completed sales contract by April 30, 2010, and complete the purchase by June 30, 2010. However, certain military families are granted an extension to use the credit. Directly from the IRS website,
“Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.”
This extension will allow certain people to benefit from the credit even if they were unable to purchase before the expiration of the original credit. Of course, no one should buy a home on the basis of this credit. If you need the credit to make your purchase sensible, then you shouldn’t be buying. It is a great bonus for people who are otherwise planning to buy and are in the right financial and life position to be buying a house.
The same regulations also provide relief for military members who take the credit but then must move before completing the required three years of occupancy. Without this change, military members who have to move before living in their house for three years would be required to repay the entire credit.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.
This still doesn’t help my family, but it may help some of you, and now people who have been deployed will have the opportunity to use this credit.