New Homebuyer Tax Credit Extension Waiting for Presidents Signature!
Both the House and Senate have passed the extension to the Homebuyer Tax Credit and it is on the way to the Presidents desk to be signed, possibly as early as today. The bill will extend the Tax Credit to buyers who have a home under contract as of April 30, 2010, and can close by July 1, 2010. There are significant improvements and additions to the bill, including increased income limits for buyers, and now a Tax Credit of $6500 is available for CURRENT HOMEOWERS as well , who want to purchase a new home – as long a they have lived in thier current Primary Home for at least 5 out of the last 8 years!
Who Qualifies for the Extended Homebuyer Tax Credit?
· First-time home buyers who purchase homes between the date the bill is signed by President Obama and April 30, 2010.
· Current home owners purchasing a home between the date the bill is signed by President Obama and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum credit allowed for current homeowners is $6,500.
How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by two additional factors:
1. The price of the home.
2. The buyer’s income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit which is effective on the date the bill is signed by President Obama single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits, and will now allow home buyers with higher incomes to qualify for the credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
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