Obama Signs Homebuyer Tax Credit Extension

On November 9, 2009 President Barack Obama signed and approved the first-time homebuyer tax credit extension. It extends the tax credit to all buyers who have a signed Purchase Agreement on a home prior to May 1, 2010 and close prior to July 1, 2010.

This extension is part of the economic stimulus bill that extends the $8,000 tax credit for first time homebuyers and also now expands the program to offer a credit of up to $6,500 to homeowners who have lived in their current home for at least five consecutive years of the last eight years and are seeking to purchase a new home. The new home must be a primary residence and can include properties of up to 4 units as long as the purchaser will live in one of the units.

Here are details regarding the bill:

Who is Eligible

• First-time homebuyers, who are defined as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit or 10% of the purchase price of the home
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  Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence, will be eligible for up to a $6,500 tax credit.
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  You must file taxes to be eligible to participate in this program.

Income Limits

• Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
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  For married couples filing a joint return, the combined income limit is $225,000.
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  Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
  

Effective Dates

• The eligibility period for the tax credit is for homes purchased (closed) after Nov. 6, 2009, and before May 1, 2010.
• Also, home purchases subject to a binding sales contract (Purchase Agreement) signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify

• All homes with a purchase price of less than $800,000 will qualify This includes new construction or resale single family homes, townhomes, or condominiums. The home must be used as the purchaser's principal residence. Note that purchases of vacation homes and rental properties do NOT qualify.

Tax Credit is Refundable

• You may take the credit on your 2009 or 2010 tax returns.
• Be sure to check with your tax adviser!
• If the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

This tax credit does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

Frequently Asked Questions from the National Association of Realtors Government Affairs Division.

Go here for The Basics on the Extended Homebuyer Tax Credit.

One again, if you have additional questions or concerns on how to apply the provisions of the new program, please call at anytime: 651-407-7864 Deb Casper, RE/MAX Specialists, White Bear Lake, MN