Homebuyer Tax Credit Extended

Extended Through April 2010, Expanded To Include Existing Homeowners,

Income Limits Increased and Homes as much as $800,000

 

Tax Credits Provide Incredible Opportunities for Home Buyers

When is the deadline?

Binding sales contracts must be signed by April 30, 2010 and the sale completed by June 30, 2010 to qualify.  For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the homeowner.

How Much is the Credit?

The tax credit is equal to 10% of the home purchase price, up to a maximum of $8,000 for first time home buyers, and $6,500 for repeat buyers.  A tax credit is a dollar-for-dollar reduction in what a taxpayer owes, and could result in a refund from the IRS.

Who Qualifies? 

The law defines a “first-time home buyer” as a buyer that hasn’t owned a primary residence for the past 3 years.  The “repeat buyer credit” says the buyer (and buyer’s spouse if applicable) must have owned and lived in the same principal residence for at least 5 years.

Joint Purchase with a Parent – IRS Notice 2009-12 allows unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter.

What are the Income Limitations?

For sales occurring after November 6, 2009, individuals with annual incomes up to $125,000, and married taxpayers filing a joint return earning as much as $225,000 will qualify for the full tax credit.  The tax credit amount is “phased out” down to zero at a “modified adjusted gross income” of more than $145,000 (single) and $245,000 (married).

Does a Land Contract Count as a Purchase?

Yes.  There are a lot of things to consider about this approach though, so call us to discuss.  Be sure the seller has owned the property for a minimum of 90 days, as this is an FHA requirement with zero flexibility.