PMC Mortgage Lender's Blog

Time is running out for the military home buyer tax credit.

While the original home buyer tax credit expired in April of 2010, a select group of service members were given one extra year, until April 30, 2011, to take advantage of the tax credit program.

Service members who qualify must get a home under signed contract on or before the April 30 deadline and must close by June 30, 2011. The military program has the same tax credit limits as the "civilian" version, up to $8,000 in tax credits for first-time buyers and $6,500 in credits for repeat buyers.

Qualifying for the tax credit means that members of the uniformed services, members of the Foreign Service, and employees of the intelligence community must have served under official extended duty.

Their service must have been outside of the United States for at least 90 days starting after December 31, 2008 and ending before May 1, 2010.

A person that is forced to return to the U.S. for medical reasons before completing an assignment of at least 90 days of qualified official extended duty outside of the United States may also qualify for the one-year extension.

Congress acknowledged the unique situations affecting members of the military, the Foreign Service, and the intelligence community and passed this extension in 2009.

Tax credit main points:

• Up to an $8,000 tax credit is available for first-time home buyers (who haven't owned a principal residence in the past three years), or $6,500 for repeat home buyers (who have owned and lived in their home for five consecutive years out of the last eight years). The credit is the lower of either 10% of the purchase price or the maximum credit limit.

• Tax credits apply only to homes priced $800,000 or less.

• To qualify for the full tax credit, the income limits for a single taxpayer is $125,000 and $225,000 for married couples.

The IRS states, "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 December 31, 2008, in connection with government orders received by the individual (or the individual's spouse) for qualified official extended duty service."

Qualified military should check with their tax professional for additional guidelines on the military tax credit program.