How Retirees can Now Benefit from the Home Buyer Tax Credit

Notbeook that says Tax Credits on calculator.

The home buyer tax credit is a chance to financially augment retirement living with a new home and lower taxes. The first and most clear way to benefit from the new home buyer tax credit is the $6,500.00 check that could be paid to home buyers by the Department of the Treasury if the property is indentured by April 30, 2010.

In the case of first time home buyers the tax credit is even higher at  $8,000.00.  Each qualifying home is subject to one tax credit regardless of the number of buyers, however the buyers can agree upon the distribution of the credit. Home buyers may also be able to use the tax credit for government mortgage program expenses such as Federal Housing Administration (FHA) Loans.

According to the U.S. Department of Housing and Urban Development, the tax credit eligibility can be ‘monetized’ for use as certain home buying expenses and down payment amounts above 3.5% of property value  For working retirees, the home buyer credit can be cited as valid reason to adjust employer retention of income, and the credit can be used in 2010 even if the property is bought in 2009 and vice versa.

Home purchases that include pass through business expenses for S-Corporations, Partnerships or Sole Proprietorships may account for lower taxable income thereby multiplying the benefit of the home purchase. 

For example, a proportional cost of moving, loan interest, depreciation and repairing a new primary residence in which a small business operates may be able to pass through these expenses for a potentially lower taxable income. Some states have home buyer tax credits of their own, however in cases such as California, the tax credit was suspended at the end of August 2009 due to budgeting constraints. House flippers should be aware the credit can be recaptured if the property is sold within 36 months of purchase.

Homes acquired via 1031 exchanges may postpone capital gains taxes while still receiving the tax credit, however this is subject to both 1031 exchange and tax credit regulations. For home buyers going into bankruptcy the real estate purchase may protect assets during bankruptcy and still qualify for tax credit thereafter.

Qualifying for the federal home buyer tax credit is based on income, purchase price percentage, property usage, residential history criteria and contractual deadline. These criteria are determined by the U.S. Internal Revenue Service on an individual  tax filing basis, and in accordance with regulatory legislation.

The home buyer tax credit can be claimed using an IRS Form 5405, and primary residences valued in excess of $800K do not qualify for new or repeat home buyer’s tax credit. Home buyers who have recently owned a home for 5 years or longer can qualify for the repeat home buyer credit, and new buyers who have not owned a home for 3 years may qualify for the first time buyer tax credit.

The income limitations establishing full eligibility for both the first-time and repeat home buyer credit requires a Modified Adjusted Gross Income of no more than $125,000 for single tax filers and $225,000 for married couples filing jointly. 

The Modified Adjusted Gross Income or MAGI can be higher than Adjusted Gross Income in some instances where specific loan interest and income deductions are considered as though non-deductible. In any case, the IRS or a qualified tax accountant can provide additional details and answers regarding the tax credit. The IRS phases out the tax credit for incomes higher than the aforementioned with a total disqualification at $145K and $245K.

Can you spot the $207,744 difference between these identical homes?

Financing is the difference!

Get the details in The 62+ Loan Homebuyers Guide.

55places Mortgage is a joint venture between Mutual of Omaha Mortgage and
Details here.

Share this post:

We're here to help! (800) 928-2055

Call us to speak with a customer service representative.

Subscribe to Our Newsletter

Get Weekly Updates

I agree that 55places and its affiliates, partner providers or agents may call, text, or email me about my inquiry, which may be made with automated means. I understand that my consent is not a prerequisite for buying a property. I may revoke my consent at any time by contacting [email protected] Message/data rates may apply. I also agree to’s Privacy Policy and Terms of Use.

The Best Places to Snowbird in 2021

We’ve gathered 25 of the best places for snowbirds, including cities in Florida, Arizona, California, Texas, South Carolina, and Nevada. For each entry, we’ve also provided a list of recommended 55+ communities in the area. If you’re ready to find your own winter retreat this season, here are some of the best places to consider.

Interior view of the indoor pool at Del Webb Ponte Vedra in Ponte Vedra, Florida.

Jacksonville Area 55+ Communities With Indoor Pools

There’s something so luxurious about an indoor pool. Take a look at these communities in Jacksonville and the surrounding northeast Florida area. You’ll find indoor pools and much, much more.

Sunset on sandy and rocky beach in the Bay Area of California.

55+ Communities on the Beach in the Bay Area

Perhaps you’re ready to turn your dream of living by the beach into reality. In that case, we’ve got you covered, because there are a few wonderful beachside 55+ communities right in the Bay Area.

A 55+ couple with arthritis holding hands and enjoying a day at the beach.

The Best Places to Retire With Arthritis

Those with arthritis know the pain and discomfort can be difficult to manage day-to-day. While there are many remedies to manage the pain, one you may not consider is climate. 55Places has taken a look at the best regions to live if you have arthritis, and many of them are home to 55+ communities!

A bridge over a pond on the grounds of Sun City Lincoln Hills in Lincoln, California.

Large 55+ Communities in the Sacramento Area

One of the greatest benefits of living in a large community is the vast amount of amenities typically offered. If you’re looking for larger 55+ communities in Sacramento, you’ll want to check out the three following communities.

Aerial view of the Downtown Spartanburg skyline in South Carolina on a sunny day.

Living in Spartanburg, South Carolina

Located in the scenic foothills of the Blue Ridge Mountains in Northwestern South Carolina—also known as the Upstate—Spartanburg is an ideal destination for active adults who want to retire in a mid-sized city with a small-town, close-knit feel.

About 55places

We’re changing the way people 55 and older are searching for their perfect next place. With a national network of hand-selected real estate experts, plus comprehensive information, unbiased content, and on-the-go insight about thousands of communities across the country, we’re a trusted resource paving the way from here to home. Whether you’re interested in a low-maintenance single-level residence, an active lifestyle or age-qualified community, an intimate enclave, or anything in between, we can help you make your next move the best one yet.

Scroll to Top