As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time buyers until April 30, 2010.
- Expands the credit to grant a $6,500 credit to current home owners purchasing a new or existing home between the date the bill was signed (November 6, 2009) and April 30, 2010.
First-time home buyers who purchase homes between the date the bill was signed by President Obama and April 30, 2010.
- Current home howners purchasing a home between the date the bill was 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 buyer the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes and co-ops.
How is a Buyer's Credit Amount Determined?
Each home buyer's tax credit is determined by two additional factors:
- The price of the home.
- The Buyer's income.
Credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
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 Home Buyer Tax Credit limits. If you purchased a home between January 1, 2009 and November 6, 2009 please see: http://www.federalhousingtaxcredit.com.
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 hi/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 extension, 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 of the credit will be recouped on the sale.
It's always a good idea to speak with your Certified Public Accountant to discuss your individual tax situation.
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