Service Members Home Ownership Tax Act of 2009

The “Service Members Home Ownership Tax Act of 2009” was signed into law on November 6, 2009.  This Act will give members of the uniformed services, intelligence agencies and Foreign Service, who were stationed abroad, greater opportunity to take advantage of the First-Time Homebuyer Tax Credit, and also ensures that housing benefits for wounded veterans and those affected by base closures are tax exempt.

Specifically this Act extends, for one year, the First-Time Homebuyer Tax Credit for members of the armed forces, intelligence service or Foreign Service who served overseas for at least 90 days during calendar year 2009.  The extension will last from December 1, 2009 to December 1, 2010.

The Act eliminates the “recapture” provision for individuals who receive the First-Time Homebuyer Tax Credit and relocate or get deployed within three years; meaning that members will not have to repay the credit if they receive orders to deploy to a different location.

Finally, the American Recovery and Reinvestment Act of 2009 expanded the Homeowners Assistance Program (HAP), which compensates service members and federal employees whose homes lost value as a result of base closures, to assist wounded service members who move to seek treatment or after medical discharge, and to service members who were re-stationed between 2006 and 2012.  This Act ensures that those benefits are tax-exempt and will not need to be declared as income.

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