On Friday, November 6th, 2009 President Obama signed the bill providing an extension of jobless benefits and the extension and expansion of the homebuyer tax credit. The extension applies to the current first time homebuyer tax credit and the expansion now includes existing homeowners. Want to hear more? Then, follow me.
FIRST let me say loud and clear CONSULT A TAX PROFESSIONAL to determine your ability to qualify for this credit! I am giving you the basic “rules of engagement”. Your tax position will ultimately determine your eligibility. With that said, let’s continue.
First Time Homebuyers – Could This Be You?
A first time homebuyer is defined as one who has not had an interest in a principal residence for 3 years prior to purchase. Basically, this means that you have not been on title (ownership) for a primary residence. If this is you, then you may qualify for a tax credit for up to $8,000 or $4,000 if married and filing separate. You must be under contract by April 30th, 2010 and close no later than July 1st, 2010. The new income limits are $75,000 per year for a single purchaser and $150,000 per year for married purchasers. The purchase price cannot exceed $800,000. Dependants are not eligible for this program and proof of settlement (ie… HUD statement) must be attached to tax return.
Existing Homeowners – Let’s See How You Stack Up
Purchaser must have used existing property as primary residence consecutively for 5 out of the previous 8 years. The credit amount is up to $6,500 or $3,250 if married and filing separate. You must be under contract by April 30th, 2010 and close no later than July 1st, 2010. The new income limits are $125,000 per year for a single purchaser and $225,000 per year for married purchasers. Purchase price cannot exceed $800,000. Dependants are not eligible for this program and proof of settlement (ie… HUD statement) must be attached to tax return.
The additional time to close beyond April 30th is important, as so many transactions are taking longer to close these days. Short sales, foreclosures, appraisals and changing lending practices can cause delayed closings.
So, we have the tax credit still in place and expanded, prices are right and interest rates are historically low. If you’re in a position to purchase, you’re in luck! Keep in mind that the anticipation of the tax credit ending November 30th has had lenders and closing attorneys stretched to get all of the transactions closed. If you plan to make use of this program, don’t wait until it’s too late. Start your planning and shopping early. More tax credit information is available by viewing FAQ’s from the National Association of REALTLORS (NAR). Or, view the NAR Brief to highlight tax credit changes.