The Newly Extended Tax Credit is Great News for Real Estate
By Deanna Lynn Sletten
Photo: © Harry Lines - iStockphoto
 Potential homebuyers who were afraid they would miss the deadline for the first-time homebuyer tax credit can now continue the search for their new home without worry. The new extended homebuyer tax credit became effective on November 7th and continues until April 30, 2010. With the new tax credit, not only do first-time buyers enjoy the benefit of a tax credit, but people who are homeowners looking to buy a different home can benefit from the program also.
Who Qualifies for the Tax Credit?
As with the original program, this tax credit allows first-time homebuyers to receive a tax credit for 10% of the purchase price of a home up to a maximum of $8,000. A first-time homebuyer is defined as a person or a married couple who hasn't owned a home for at least three years.
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Homeowners who have recently sold their home or are looking to sell and buy a new or existing home can receive a tax credit up to $6,500. To qualify, the home they sell must have been their primary residence for at least five consecutive years over the past eight years.
Additional Program Stipulations
The extended homebuyer tax credit applies to the purchase of primary residences only, which includes condos, townhouses, co-ops and single-family homes. The maximum price of the home purchase cannot exceed $800,000. The tax credit will be allowed on purchases up to the April 30th, 2010 deadline as long as a contract for purchase has been signed and closing on the house is no later than June 30th. The buyer must live in the home for at least three years after the purchase or the tax credit must be repaid.
Income limits to receive the maximum tax credit are up to $125,000 a year for a single buyer and up to $225,000 for a married couple. The credit received is reduced as the income level rises. For a single buyer the maximum income level is $145,000 and for a married couple it is $245,000. Incomes over the maximum are disqualified.
With lower-than-normal home prices and affordable interest rates, the extension of the homebuyer tax credit makes this the perfect time for people to buy a new or existing home. |
