Home Buyer Tax Credit Expiring Soon!

by admin on March 17, 2010

in Real Estate News

Home Buyer Tax Credit Expiring Soon!

A first-time home buyer tax credit up to $8,000 that has been in effect will be expiring on April 30th, 2010. This credit, which was part of a plan to stimulate the U.S. housing market was originally set to expire last year, but was extended by the U.S. Congress because of the continued economic challenges that our country has been facing. In addition to this, the credit is also being granted to some existing home owners who are purchasing a new or existing home. To help inform you of what this means to you and if you qualify, we have broken down this article in to a question and answer format:

Question: How do I know if I qualify for the home buyer tax credit?

Answer: If you are a first-time home buyer that enters in to escrow by April 30, 2010 or if you are a current home owner purchasing a home by April 30, 2010 who have used the home being sold or vacated as a principal residence for five (5) consecutive years within the last eight you will likely qualify for the tax credit. (A person may qualify as a “first-time home buyer” if neither they nor their spouse has owned a residence during the three years prior to the purchase.)

Question: What type of properties are eligible for this tax credit?

Answer: Properties which are considered primary residences will qualify, including single-family homes, condos, townhomes, and co-ops.

Question: What is the maximum tax credit available?

Answer: The maximum credit for a first-time buyer is $8000. The maximum credit for a current homeowner is $6500. It is important for you to consult your tax professional, and the IRS to know exactly what you will qualify for.

Question: How is the buyer’s tax credit determined?

Answer: There are two main criteria used to determine the amount of credit awarded to buyers. The first is the price of the home. The second is the buyer’s income. To qualify for the credit, the home being purchased may not exceed $800,000. As for the buyer’s income, a single buyer who has income up to $125,000 and married couples with income up to $225,000 may receive the maximum tax credit. (These amounts are different from the original buyer tax credit legislation which began in January 2009 and expired in November of 2009.)

If you earn more than these amounts, you may still qualify for a pro-rated portion of the credit. If you earn more than $145,000 as a single buyer, or $245,000 as a couple, you are not eligible for the credit.

Question: What is the final deadline for closing escrow and still qualifying for the credit?

Answer: As long as you are under contract for the purchase of the home by April 30, 2010 you have until July 1, 2010 to close escrow.

Question: Is there any chance that the tax credit will need to be repaid to the government?

Answer: Yes. There is a stipulation that you must occupy the purchased home for three years or more. If you do not live there for at least three full years, the entire amount of the credit will need to be repaid upon the sale of that home.

We hope that this information helps you in determining your eligibility for the tax credit. Perhaps now that you realize that this great opportunity is running out, you are interested in purchasing. If so, please contact us so that we can begin assisting you in your search for a new home. You can email the Radiant team at: info@RadiantPG.com. We look forward to hearing from you!

For more information, you can also visit this IRS website.

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