RISMEDIA, April 5, 2010—The special tax credit for both first-time and long-time resident homeowners will soon expire. Extended for seven additional months to allow buyers to find the house of their dreams, this benefit expires April 30, 2010. Jackson Hewitt Tax Service reminds potential home buyers that if they want to take advantage of the First-Time Home Buyer Credit, they must act quickly and put their plans in motion now to contractually close on their new home on time.

According to the extended tax rule, first-time home buyers, or resident home buyers interested in a new home, must purchase their home or be locked into a contract to close by midnight on April 30, 2010, and must close by midnight on June 30, 2010. The Internal Revenue Service considers the purchase date to be the date when the home closing takes place and when the title to the property is transferred to the new owner.

“First-time home buyers who enter into a contract in the next 30 days are on track to claim a significant tax benefit, which allows them to claim 10% of the purchase price of their home, up to $8,000 for married taxpayers filing joint, or $4,000 for married taxpayers filing separately,” said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. “Although much of the talk has been about the First-Time Home Buyer credit and now its upcoming expiration, long-time resident homeowners who meet the qualifications need to know that the credit will expire for them on the same date, and that they must close by June as well.”

Here are some reminders about who is eligible for this credit – and how to claim it:

- The First-Time Home Buyer credit is allowed in full for those with incomes up to $125,000 ($225,000 if married filing joint). The credit is reduced for taxpayers with an income between $125,000 and $145,000 ($225,000 and $245,000 if married filing joint) and is not available for taxpayers with an income higher than $145,000 ($245,000 if married filing joint).

- To be considered a first-time home buyer, an individual must not have owned a principal residence during the three-year period prior to the purchase. For example, the credit would not apply to a couple where one spouse owned a principal residence in the three years prior to purchasing a new home, even if the other spouse purchases the new home as a sole owner.

- Taxpayers (and their spouses) who have lived in their home for five consecutive years out of the eight years preceding closing on a new house may qualify for a reduced credit ($6,500 or $3,250 for those who file separately).

According to Steber, it is still possible to claim the credit on a 2009 tax return if a home is purchased after the April 15 filing deadline. To do so, save all of the documentation related to the purchase and speak with a tax preparer about amending a 2009 tax return.