A nice bonus awaits many home buyers in this new year. The Home Buyer Tax Credit has been extended and expanded to include many more potential home buyers.
The Home Buyer Tax Credit actually began back in 2008 as a $7,500 credit only available for first time home buyers. And it had to be paid back at the rate of $500 each year over 15 years, or in total upon the sale of the home.
In 2009 the amount was increased to $8,000 and there was no requirement to repay the money as long as the buyer lived in the home for at least three years. However, it still applied only to first time home buyers.
For 2010 our federal government has pulled out all the stops and is offering a greatly enhanced program that is open to many more home buyers. Including folks who currently own a home.
What is the time frame?
Just in time for the seasonal increase in home buying that occurs each year, the Home Buyer Tax Credit basically runs for the first half of 2010. The deadlines are that you must be under contract by April 30, and you must close by June 30.
How much is the tax credit?
First time home buyers can claim $8,000, just like in 2009. And now for the first time, current home owners looking to move up or downsize can claim a $6,500 tax credit.
Who is a first time home buyer?
The same as in 2009, a first time home buyer is anyone who has not owned a primary residence in the past three years. If you happen to own income properties, but have not lived in any of them for the past three years, you still qualify.
Are there income limits?
Yes. Single home buyers’ incomes must be below $125,000 and married home buyers’ incomes must be below $225,000 to receive the full credit. The tax credit decreases for single home buyers with incomes over $125,000 and phases out completely at $145,000. Married couples can claim a decreased tax credit at incomes between $225,000 and $245,000.
Does the tax credit need to be repaid?
In most cases, no. As long as the home buyer occupies and does not sell the home for a period of three years, the money is yours to keep! There is also a provision for active military who receive orders that require them to move which waives the payback requirement during the three year period.
Is there any limit on the price of the home?
Well, there is, but it hardly matters. Homes that sell for over $800,000 do not qualify. There are a whole bunch of excellent choices in homes in the real estate markets of Raleigh, Wake Forest, Cary and surrounding areas for under $800,000. So far, this has not been an issue here.
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we bought a house as a primary residence 2008 aug. do i qualify for the tax credit of $6500? who gets qualified for the $6500 tax credit?
Hi Marilyn – August 2008 has been a while back, but I think the original $7500 tax credit was in place back then. It had some different parameters, such as having to be paid back to the IRS at the rate of $500 per year. It seems that there was a deadline to claim this as well. You should check with your tax professional to be sure.