Homebuyers who were unable to close on their purchases by the June 30, 2010, deadline imposed by the Worker, Homeownership, and Business Assistance Act of 2009 ( P.L. 111-92 ) have been granted an additional three months in which to complete their sales and still qualify for the first-time homebuyer tax credit. On July 2, 2010, President Obama signed H.R. 5623 ( P.L. 111-198 ), which was introduced and passed by the House on June 29, 2010, and passed in the Senate by unanimous consent on June 30, 2010. The law's provisions to extend the homebuyer tax credit mirror those contained in an amendment to H.R. 4213 that was offered by Senator Reid. The law only affects those people who would have qualified for the credit if they had completed their purchase before July 1, 2010. This means that before May 1, 2010, they must have entered into a binding contract to purchase a residence and that contract must have called for closing before July 1, 2010. Those who had such contracts, but were unable to close on the sales by June 30, 2010, are allowed to close before October 1, 2010, and treat the purchase as if it had occurred before July 1, 2010. The new law modifies a provision of The Worker, Homeownership, and Business Assistance Act of 2009 ( P.L. 111-92 ) that extended the eligible dates of purchase to include purchases before May 1, 2010, as well as those that were under a binding contract on that date if the contract provided for closing the sale before July 1, 2010, and the sale was completed before that date. Previously, there had been no exception that allowed closing after the statutory deadline for the purchase. The credit was created in 2008 as part of the Housing and Economic Recovery Act of 2008 ( P.L. 110-289 ) in response to the housing crisis in 2007 and 2008. As originally enacted, the credit was available only for purchases made after April 8, 2008, and before July 1, 2009. The credit also had two characteristics that made it unlike most other tax credits—it was refundable, and it was repayable; however, the repayment requirement was subject to certain exceptions. The American Recovery and Reinvestment Act of 2009 (ARRA) modified the first-time homebuyer tax credit for those taxpayers purchasing principal residences in 2009, increasing the amount of the credit, extending the eligible purchase dates through November 30, 2009, and generally eliminating the repayment provision for purchases after 2008. In addition to extending the eligible dates of purchase and allowing an additional two months in which to complete the purchase, the Worker, Homeownership, and Business Assistance Act of 2009 expanded the statutory definition of "first-time homebuyer" by introducing an exception for those who have owned and used the same residence as their principal residence for any period of five consecutive years during the eight-year period that ends on the date they purchase a subsequent property to use as their principal residence. These "long-time residents" generally are treated as first-time residents; however, their credit is capped at $6,500. P.L. 111-92 also raised the income limitation for all qualifying purchases, making more buyers eligible to claim the full credit. However, the law imposed new restrictions on qualifying for the credit. For purchases after November 6, 2009, property costing more than $800,000 is no longer eligible for the credit. Eligible purchasers must be at least 18 years old and cannot be eligible to be claimed as a dependent on another taxpayer's tax return. For all tax returns for calendar year 2009 and later, taxpayers must attach a copy of their settlement statement to their tax returns. Certain members of the military, foreign service, and intelligence communities received special consideration under P.L. 111-92 . For those who either sold or ceased using their property as their principal residence as a result of official government orders, the repayment requirement was virtually eliminated. Those who served on qualified official extended duty outside the United States for a period of at least 90 days during the period beginning January 1, 2009, and ending April 30, 2010, may qualify for the credit if they purchase a residence before May 1, 2011, or have entered into a binding contract by that date; if the contract calls for closing before July 1, 2011; and if they close before July 1, 2011. The recent three-month extension for closing provided by P.L. 111-198 does not apply to allow them the credit if they close after June 30, 2011, and before October 1, 2011. The credit is called the "First-time Homebuyer Credit." Taxpayers must purchase property within a prescribed time period, use the property as their principal residence, and meet the definition of "first-time homebuyer" as provided in the law. Beginning on November 7, 2009, some who did not previously meet the statutory definition will qualify for the credit; however, their credit will be subject to a lower dollar limit. For purchases after November 6, 2009, qualified purchasers must be at least 18 years old and cannot be eligible to be claimed as dependents on any other taxpayer's return. Additionally, taxpayers will not qualify for the credit if the purchase price of the residence is more than $800,000 and it is purchased after November 6, 2009. One might think that only someone who had never before purchased a principal residence could be considered a first-time homebuyer. However, the law is not that literal. A first-time homebuyer is an individual who, during the three-year period ending on the date of the purchase, has had no present interest in property used as that individual's principal residence. If the individual is married at the time the property is purchased, neither spouse may have had such an interest in the three-year period. However, unmarried individuals who buy property as co-owners are not "tainted" by another co-owner's recent ownership interest in a principal residence—each unmarried co-owner's status as a first-time homebuyer is determined independently. Ownership of real property that has not been used as a principal residence within the three-year period does not disqualify an individual for the tax credit. Examples of such property include vacation homes and rental or investment properties. For residences purchased after November 6, 2009, P.L. 111-92 introduced an exception to the general definition of first-time homebuyer as described above. The exception applies to "long-time residents of the same principal residence" (long-time residents). These individuals are those who have both owned and used the same property as their principal residence for five consecutive years during the eight-year period that ends on the day a subsequent principal residence is purchased. Long-time residents will be treated as first-time homebuyers and be eligible for the tax credit if they otherwise qualify and purchase a new property after November 6, 2009, that they will begin using as their principal residence. The law specifically requires that, in the case of married taxpayers, both taxpayers have owned and used the same property as their principal residence for the required five consecutive years. It does not include a provision for imputing the five-year period of ownership to a non-owner spouse nor for allowing any portion of the credit when only one spouse meets the usage requirement. The marital status of the purchasers on the date of purchase determines whether they must each qualify for the credit that is claimed. Unlike those who are married when they purchase a new residence, two people who are unmarried on the date of purchase could each qualify as long-time residents using different prior residences. Similarly if one unmarried person who was a long-time resident purchased a new residence with another unmarried person who had not owned a home within the last three years, each person could qualify for the homebuyer credit—the first as a long-time resident and the second as a first-time homebuyer. In that case, the credit could be divided between them so long as the long-time resident claimed no more than $6,500. The party who had not owned a home in the last three years would be able to claim a maximum credit of $8,000, but would be required to reduce it by the amount claimed by the long-time resident. The code section that creates the credit does not explicitly define the term "principal residence." The term is said to have "the same meaning as when used in section 121" of the Internal Revenue Code (IRC). Section 121 provides no explicit definition but uses the term and refers to situations in which property that might otherwise not be thought of as a principal residence will nonetheless be considered one. However, a Treasury regulation provides guidance regarding property that may be considered a principal residence. According to regulation § 1.121-1, to be a principal residence, property must first be used as a residence. Facts and circumstances determine whether property is used as a residence. The regulation notes that "a houseboat, a house trailer, or the house or apartment that the taxpayer is entitled to occupy as a tenant-stockholder in a cooperative housing corporation" may be a residence, but personal property that is not a fixture under local law is not included. A taxpayer may have more than one residence, but can have only one principal residence. When there is more than one residence, determining which of the residences is the principal one depends on facts and circumstances. Some of the factors that can be relevant are where the taxpayer works; where the taxpayer's family lives; where the taxpayer banks; where the taxpayer attends religious services; where the taxpayer belongs to recreational clubs; the taxpayer's usual mailing address for bills; and the addresses used on income tax returns, driver's licenses, car registrations, and voter registrations.