January 10th, 2010 Categories: Real Estate News
Just yesterday I was having lunch with my niece and her new finance. They are getting married in July and we naturally started
talking about where they going to live in Northern Virginia. Then, of course, we started talking about the extended home buyers tax credit and what you need to know.
I’ll tell you, just like I told them, if you haven’t already started looking you stand a good chance of running out of time. This is the bottom line:
- You must have a written, binding contract by April 30, 2010
- You must close by July 1, 2010
It’s true that you could, conceivably, find a house on April 28 or the 29th and have a written, binding contract by the end of the day on April 30. IF – and it’s a big IF – you are willing to forgo an inspection, you have no contingencies and the property is not a short sale.
On the other hand, if you want to see a variety of neighborhoods, if you like to deliberate, if you want a home inspection or if you want to
look at short sales then you need to start looking NOW.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including single-family homes, condos, townhomes, and co-ops.
Who is Eligible?
First-time homebuyers are defined as people who have not owned home in the previous three years. Repeat buyers must have owned their
current home at least five years. The credit cannot be used for houses costing more than $800,000.
How Much Credit Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
Pay Rate to Qualify? Wage earnings for a Single Income is $125,000
Wage earnings for Family Income is $225,000.
If the Buyer(s) Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly.
The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income-over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is
sold during this three-year period, the full amount credit will be recouped on the sale.
How to Apply for the Credit.
Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a
payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1,
2009, to May 1, 2010.
Now you’ve got what you need to know about the Extended Home Buyers Tax Credit. Still have concerns? Call me at 703.927.4554.