WASHINGTON, D.C. – U.S. Representative Walter B. Jones (R-NC) recently introduced H.R. 2398, legislation that would amend the Internal Revenue Code of 1986 to allow a member of the U.S. Armed Forces to retain the first-time homebuyer tax credit if they must sell their home within 36 months of purchase because the service member is transferred to a new duty station, deployed overseas, or required to reside in government quarters during that period.

“Under current tax law, service members who buy their first home are unlikely to be able to use the first-time homebuyer credit like other American taxpayers,” Congressman Jones said. “Because many of our military personnel serve at a duty station for only a few years at a time, those who buy a first home are often transferred and have to sell their first residence before the 36 month holding requirement is met. The bill I’ve introduced would fix this problem by allowing our military men and women the flexibility they need to benefit from this tax credit.”

BACKGROUND:

Last year, Congress passed the Housing and Economic Recovery Act (H.R. 3221), which included a provision establishing a First Time Homebuyer Tax Credit of 10% of the purchase price (to a maximum of $7500) for any first time homebuyer who bought a home between April 9, 2008 and July 1, 2009. The provision included a recapture clause which required the credit to be paid back over 15 years.

Earlier this year, Congress passed H.R. 1, better known as the Economic Stimulus Package. Included in that bill was a provision which modified the First Time Homebuyer Tax Credit language of H.R. 3221. Under the new language, the credit was increased from $7500 to $8000 and the window in which to make an eligible purchase was extended from July 1, 2009 to December 1, 2009. Furthermore, the recapture provision was eliminated, allowing the credit to be fully retained by the taxpayer – so long as the homebuyer did not sell the home for 36 months after purchase.