Homebuyer Tax Credit Extended and Expanded!
Tax Credit for First-Time Homebuyers
FTHBs (that is, people who have not owned a home within the last three years) may be
eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home,
with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit
Tax Credit for Current Homeowners
The tax credit program now gives those who already own a residence some additional
reasons to move to a new home. This incentive comes in the form of a tax credit of up to
$6,500 for qualified purchasers who have owned and occupied a primary residence for a
period of five consecutive years during the last eight years.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30,
2010 and close no later than June 30, 2010. Those in the military do have some special
extensions on the timelines available.
What's So Great About a "Tax Credit"?
The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax
deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when
all was said and done. So, if a first-time homebuyer who qualified for the entire benefit
were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she
would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check
for the credit if he or she has little or no income tax liability. For example, if a first-time
homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she
can still receive a check for the remaining $4,000!
Higher Income Caps
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those
who earn more than this cap can receive a partial credit. However, single filers who earn
$145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who
earn more than this cap can receive a partial credit. However, joint filers who earn
$245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
Courtesy of Christian Johnson-Shelter Mortgage