Home Buyer Tax Credit Extended
On November 6, 2009, President Obama signed “The Worker, Homeownership and Business Assistance Act of 2009”, otherwise known as the “The Home Tax Credit”. The new bill extends the housing credit that was about to expire plus adds new benefits for many that would not have qualified before.
The Home Tax Credit is an act whereby first-time home buyers will receive a tax credit of $8,000, and “move-up/repeat” home buyers will receive a $6,500 tax credit. Because these are tax credits, the IRS has provided definitions or explanations for the terms “first-time home buyer” and “move-up”/repeat home buyer.
According to federalhousingtaxcredit.com, “first-time home buyer” is “someone who has not owned a principal residence during the three-year period prior to the purchase. A move-up/repeat home buyer “must have owned and lived in their previous home for five consecutive years out of the last eight years”.
The $8,000 and $6,500 figures are the maximum amount of tax credit that can be received. In other words, your tax credit amount may be less than $8,000 or $6,500, depending on what 10% of your home’s purchase price is. It will not be more than $8,000 or $6,500. Further, the purchase price of the home must be $800,000 or less in order to be eligible for the tax credit.
First-time homeowners who bought houses after January 1, 2009 and before or by April 30, 2010, are eligible. If, however, first-time home buyers enter into and sign a binding sales contract by April 30, 2010, they will be eligible as long as all purchase arrangements have been completed by June 30, 2010.
Tax credit eligibility for repeat home buyers applies to homes purchased after November 6, 2009 and before or by April 30, 2010. Repeat home buyers have the same rights concerning entering into and signing a binding sales contract by April 30, 2010 and purchase arrangements being completed by June 30, 2010, just as first-time buyers do.
Home buyers purchasing houses on or after January 1, 2009 and by or before November 6, 2009 can only make up to $75,000 if they file single tax returns and up to $150,000 if they are a married couple who files joint tax returns.
Single taxpayers who purchase homes after November 6, 2009 and by or before April 10, 2010 can earn up to $125,000 however while married couples who purchase homes during the aforementioned time period can
earn up to $225,000. If this is the case, they will qualify for the full tax credit.
As you can see, the new Home Tax Credit will help not only new home owners but many others that need that extra push or helping hand to get into the buyers market. This in turn will also help others who are involved in the home sales industry. This includes, although it is certainly not limited to, realtors and builders and lenders. This in turn will strengthen the housing market, which we believe will have a positive effect on the economy.
