With the real estate landscape changing almost daily it’s admittedly hard for Real Estate Agents and Lenders to keep up with all of the new programs and limitations.
Recently, you may have heard on the news or read in the media about the $8,000 tax credit extension for first-time homebuyers. But are you aware you may easily qualify for it and not even know?
Our guess is probably not. That’s because there hasn’t been a great deal of quality reporting on what the income threshold is to qualify; and even if you knew that, what does that translate to in terms of purchase price?
The terms and conditions are too lengthy to cover in a blog and we’d lose half of our readers if we attempted, so here’s the stuff you need to know to see if you’re in the ballpark:
First, did you know that the income threshold nearly doubled last November? You may have heard that the program was extended, but a few other goodies were also thrown in including adding a $6,500 tax credit for recurring homeowners.
Who is eligible to claim the $8,000 tax credit?
First-time home buyers purchasing any kind of home—new or resale—are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after January 1, 2009 and on or before April 30, 2010. 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 home owner. However, the law also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010.
What is the definition of a first-time home buyer?
The law defines “first-time home buyer†as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
How is the amount of the tax credit determined?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000.
Are there any income limits for claiming the tax credit?
Yes. For sales occurring after November 6, 2009, the income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.
So how much home could I buy at the maximum income levels?
The maximum purchase price is always $800k and a couple cannot make more than $225K per year.
If you’ve been looking to get into the housing market or are interested in a change in your current housing these tax incentives—a credit that does not have to be repaid and comes right off the top of your tax bill—along with historically low interest rates and home values that have dropped to levels seen back in 2000 may be just the incentive to get you to take action sooner rather than later. The government has been artificially keeping interest rates low and that along with the tax credit will soon end.
Next Blog Part 2. A look at interest rates and how they are your best friend—for now…
The information contained in this newsletter is educational and intended for informational and entertainment purposes only. It does not constitute tax or legal advice, nor does it substitute for tax or legal advice.