Great News For Buyers: Homebuyer Tax Credit Extended and Expanded

Updated November 16, 2009

Summary:
The Homebuyer Tax Credit, due to expire on November 30, has been extended and expanded in an effort to stimulate the housing sector. The new law, effective November 6, 2009, will continue to offer an $8,000 tax credit for first-time home-buyers, and now allows a $6,500 credit for many other home-sellers who purchase.

First-time homebuyers receive an $8,000 tax credit

Repeat homebuyers receive a $6,500 tax credit

The extended deadline requires a signed purchase agreement by April 30, 2010 and property closing by June 30, 2010

The income limit is $125,000 individual/$225,000 married

The purchase price limit is $800,000

This credit will need to be paid back if you sell this home in less than 3 years.

1. First-Time Homebuyers – $8,000 Tax Credit

The credit for first-time homebuyers is available to:
o Buyers who have never owned a home
o Buyers who have not owned a home three years prior to the date of the new purchase.

The credit equals 10% of the home’s purchase price with a maximum credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
o In the case of married couples, if either spouse has owned a primary residence in the last 36 months, neither would qualify for the credit.
o An individual who has owned a non-primary residence, such as a second home or investment property, is still eligible for the credit.

2. Home-Sellers Purchasing a Home – $6,500 Tax Credit
The tax credit program now gives those who already own a residence some additional reasons to move to a new home.

Long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500.

They must have lived in the same home for any five-consecutive years of the eight-year period that ended on the date the replacement home is purchased.

Tax Credit Requirements and Limitations

A tax credit is a direct reduction in Federal tax liability owed by an individual to the IRS. The credit:
o Applies only to homes used as a taxpayer’s principal residence
o Reduces a taxpayer’s tax bill or increases his or her refund.
o If no taxes are owed, the IRS will issue a check for the amount of the tax credit, just like a refund on your taxes.

The credit does not have to be paid back unless the home is sold or ceases to be the primary residence at any time within the first 3 years of ownership.

Buyers must sign purchase agreements on a new or existing primary residence before April 30, 2010 and close the transaction before June 30, 2010.

There is an $800,000 price limit on all homes eligible for the credit.

Income limits for all buyers are now $125,000 per year for individuals and $225,000 for married couples.
o Under the old program, the limits were $75,000 and $150,000 respectively.
o Individual tax filers who earn more than $125,000 but less than $145,000 can receive a partial credit. Likewise, joint filers who earn more than $225,000 but less than $245,000 are eligible for a partial credit.

The tax credit program will be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

For more information contact your Bella Casa Real Estate Professional:

Bella Casa Real Estate Group
207 NE 19th Street, Suite 100
McMinnville OR 97128

503-437-9005
1-866-281-6653 Fax
[email protected]
www.TheBellaCasaGroup.com

buy. sell. be happy.