Military Members Can Still Utilize Homebuyer Tax Credits

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Thousands of Americans took advantage of the landmark $8,000 tax credit for first-time homebuyers that expired last fall. The first-timer credit and its companion $6,500 credit for existing homeowners helped breathe life into the slumping real estate market. But there's one deserving demographic that didn't get a fair shake at the money-saving opportunity — U.S. military members who were serving overseas during the program's duration. The good (and in many circles, surprising) news is that qualified service members can still take advantage of these tax credits, long after they were shuttered for civilians. (See also: The First-Time Homebuyer Credit: How Big of a Deal Is It?)

The clock is ticking, though. Military members who served at least 90 days on qualified extended duty outside the United States from January 2009 through April 2010 are eligible to utilize the tax credits. Participants have until April 30 to purchase a home and until June 30 to close. Otherwise, the program requirements for military members are essentially the same:

• The home's purchase price cannot exceed $800,000
• At least one of the purchasers must be 18 or older
• Individuals can't have an annual income greater than $125,000; married couples who file taxes jointly can't have a combined annual income greater than $225,000
• First-time buyers cannot have owned a home in the last three years

Military members interested in using the $6,500 credit for existing homeowners must have lived in their home for five of the last eight years.

The tax credit can be claimed regardless of the type of financing you're using, including VA loans, which are geared toward active duty service members and veterans. These government-backed loans have helped more than 18 million veterans become homeowners since 1944. VA loans come with no down payment, no private mortgage insurance, and flexible guidelines. Service members who have returned home from serving our country abroad can combine the benefits of a VA loan with these significant tax credits.

These homebuyer tax credits aren't the only tax breaks available for military members and their families. Passed in 2003, the Military Family Tax Relief Act features provisions for home sales and travel expense deductions. Active duty personnel who served overseas may also be able to deduct taxes paid to foreign governments. The same is true if a spouse earned an income overseas and paid taxes. Even the cost of uniforms and military decorations may be tax deductible.

Service members should check with a tax preparation expert to make sure they're capitalizing on the benefits earned by their service.