Twenty percent of homebuyers who purchased a home say they would not have bought without the first-time homebuyer tax credit, says the National Association of REALTORS®. About 1.4 million home buyers took advantage of the credit, which was due to expire November 30, 2009, says the Internal Revenue Service.
But quick action by Congress and President Obama has extended the first-time homebuyer tax credit (up to $8,000 for qualified buyers) to April 30, 2010, and expanded the credit to move-up buyers. Current homeowners who have lived in their homes consecutively for five out of the past eight years are eligible for up to $6,500 tax credit on a new or existing home purchased between November 7, 2009 and April 30, 2010.
The tax credits come with some eligibility requirements:
1. Homes purchased must be $800,000 or less.
2. Move-up homebuyers must have occupied their current, or most recent, primary residence consecutively for five of the previous eight years to be eligible for the tax credit.
3. Only single buyers with adjusted gross incomes up to $125,000 and married couples with combined incomes up to $225,000 are eligible for the full credit. The credit then phases out as adjusted gross income increases up to $145,000 for single buyers and $245,000 for married couples.
4. FHA, Fannie Mae and Freddie Mac conforming loan standards apply. The tax credit does not substitute for a down payment, but it can be used to supplement a down payment or pay down closing costs.
5. Only U.S. Citizens who file tax returns are eligible.
If a homebuyer has a written binding contract on or before April 30, 2010, and is unable to close before the deadline, the Extended Home Buyer Tax Credit allows until June 30, 2010 to close. To learn more about how the tax credit works, visit the following links:
• Tax credit determinations (as determined by IRS)
• Comparison document showing the changes and provisions of the new Homebuyer Tax Credit
This information is not meant to be tax or legal advice. As with any tax law change, consumers should check with a tax advisor regarding availability, eligibility and possible timing of any tax credit.