Military Home Buyer's Credit Available through June 30, 2011

Subject: Homebuyer Tax Credit for Military and Foreign Service Employees Based overseas.

While the Homebuyer Tax Credit has expired for most buyers signing contracts after April 30, 2010, the credit remains in effect for certain military personnel and foreign service employees deployed overseas for 90 days or more between January 1, 2009 and April 30, 2010.

They can still claim the credit if they sign a contract on or before April 30, 2011 and close on or before June 30, 2011. While this is a relatively small group, it is worth keeping in mind particularly for members of the military ending tours of duty in Iraq and Afghanistan among other places as well as sailors returning from naval deployments across the globe.

See below for additional details.

* 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.

* 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. Other Rules for the credit remain the same:

• Up to $8000 credit for first time homebuyers (up to $4000 for married filing separately).

 • Long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

• People with higher incomes can now qualify for the credit. The law raises the income limits for homes purchased after Nov. 6, 2009. The credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. The existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009. Several new restrictions apply to homes purchased after Nov. 6, 2009.

• Purchasers must attach a properly executed settlement statement to their return. • No credit is available if the purchase price of the home exceeds $800,000. • The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.

• A dependent is not eligible for the credit. • The new law gives the IRS broader authority to deny first-time homebuyer credit claims, without having to first audit a taxpayer’s return. Known as math error authority, this authority applies, retroactively, to credits claimed on original and amended 2008 returns, as well as to claims yet to be filed.