Lewes CPA
officeProgar & Company, P.A.
Certified Public Accounting services for businesses and individuals
Tax relief for military and other service members in the Worker,
Homeownership, and Business Assistance Act of 2009
Dear Reader:
On November 6, 2009, President Obama signed into law the “Worker,
Homeownership, and Business Assistance Act of 2009” (the 2009
Assistance Act). In addition to providing an extension of
unemployment benefits for the long-time jobless, the 2009 Assistance
Act includes tax relief for military and other service members. I'm
writing to give you an overview of these new provisions. Please call
our offices for details of how the new changes may affect you or
your family.
Waiver of Homebuyer Credit Recapture
The first-time homebuyer tax credit must be recaptured (i.e., paid
back to the government) if the home is sold (or ceases to be used as
a principal residence) within three years of the purchase. A more
extensive recapture rule applies to qualifying home purchases in
2008. The 2009 Assistance Act provides that the first-time homebuyer
credit does not need to be paid back if, after December 31, 2008,
the home is sold (or ceases to be used as a principal residence) by
a member of the uniformed services, a member of the U.S. Foreign
Service, or an employee of the intelligence community, in connection
with a government order received by the individual or the
individual's spouse for qualified official extended duty.
Extension of Homebuyer Credit for Service Members Overseas
The first-time homebuyer tax credit was scheduled to expire on
November 30, 2009, but the 2009 Assistance Act extends the credit to
purchases before May 1, 2010 (July 1, 2010, for taxpayers with
binding contracts). For service members serving overseas, the
extension is one year longer. The 2009 Assistance Act provides that
for service members serving outside the United States for at least
90 days during the period beginning after December 31, 2008, and
ending before May 1, 2010, the purchase must occur before May 1,
2011 (July 1, 2011, for taxpayers with binding contracts). The idea
behind this additional extension is to allow service members
stationed overseas to take advantage of the credit when they return.
Exclusion from Gross Income of Qualified Military Base Realignment
and Closure Fringe
The Homeowner's Assistance Program (HAP) has long provided payments
to certain Defense Department employees and members of the Armed
Forces to offset the adverse effects on housing values that result
from a military base realignment or closure. These payments are
excluded from the recipient's gross income and are not considered
wages for FICA tax purposes (including Medicare). The stimulus
legislation enacted earlier this year (i.e., the American Recovery
and Reinvestment Act of 2009 (ARRA)) expanded HAP to cover, among
other things, individuals whose property values were affected by the
current real estate slowdown, including wounded Armed Forces members
and civilian Department of Defense and Coast Guard employees, and
Armed Forces members permanently reassigned from an area at or near
a military installation. The new law expands the exclusion from
income to cover HAP payments authorized under ARRA, effective for
payments made after Feb. 17, 2009 (ARRA's enactment date).
I hope this information is helpful. If you would like more details
about this or any other aspect of the new law, please do not
hesitate to call.