New legislation provides a three-month reprieve to those taxpayers who could not meet the June 30 closing date for the First-Time Homebuyer Tax Credit. The "Homebuyers Assistance and Improvement Act of 2010", signed by the President on July 2, extends the current deadline from June 30, 2010 to September 30, 2010.  Buyers must still have signed a sales contract by April 30, 2010 in order to qualify for the credit.  

The law also provides a tax benefit to long-time residents of the same main home (a consecutive five-year period in the last 8 years) to claim the credit if they purchase a new principal residence. 

Taxpayers must complete the special filing and documentation requirements when claiming the credit.  Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, must be completed and must be accompanied by a copy of the settlement statement. For qualifying purchases by long-term home owners, the IRS requires either Form 1098, Mortgage Interest or property tax records to be included with the return.

The available credits are the lesser of $8,000 or 10% of the purchase price for first-time home buyers or the lesser of $6,500 or 10% of the purchase price for existing home owners. No credit is available if the purchase price exceeds $800,000.  The credit is phased out for buyers with adjusted gross income between $125,000 and $145,000 ($225,000- $245,000 for joint filers.)

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