Revised Tax Credit for 2010:
As of November 6, 2009 both houses of congress have passed an extension to the first-time home buyers' tax credit until April 30, 2010. (Contracts in place by April 30, 2010 will be given 60 days to complete the transaction.)
New Provision: Congress has added a $6500 tax credit for repeat buyers if they have lived in the same home for 5 of the last 8 years. This means you can purchase a new home and receive up to $6500 in tax credits even if you are not a first-time home buyer. This new home does have to become your primary residence and you do not have to sell your old home to qualify for the credit.
Income limits in the new bill are $125,000 for individuals and $225,000 for joint filers. Individuals with incomes of up to $145,000 and joint filers with incomes up to $245,000 will qualify for reduced credits.
Frequently Asked Questions about the First-Time Home Buyers' Tax Credit
I have been asked many questions about the Federal Governments "First-time Home Buyers' Tax Credit". I will attempt to answer most of those questions here. If you are in doubt about how to go about using this credit, please partner with your real estate agent or a tax advisor.
- What is the maximum amount of the tax credit for purchasing a new home? The credit is the lesser of 10% of the cost of the home or $8000.
- What type of property is eligible for the tax credit? Any single family residence that will be used as a principal residence.
- What if my tax liability is less than the $8000 credit? If the tax amount owed at the end of the year is less than $8000 you will receive a tax refund for the difference.
- Is there an income limit to receive the tax credit? Yes, indidviduals with adjusted gross incomes of no more than $75,000 and joint filers with incomes of no more than $150,000 per year are eligible for the full $8000 tax credit. The tax credit phases out above those limits. Individuals with adjusted gross incomes over $95,000 and joint filers with incomes over $170,000 are not eligible for the program.
- Do I have to be a first-time home buyer to participate in the program? Yes, the purchaser and the purchaser's spouse may not have owned a principal residence in 3 years previous to this purchase.
- Do I have to repay this tax credit? No, there is no repayment for eligible purchasers who purchase a home between January 1, 2009 and November 30, 2009.
- What if I use this program, get my tax credit, then later sell my home? If a home is sold within 3 years of purchase, the entire amount of the credit is recaptured.
- When does this program end? You must purchase and close on a home by November 30, 2009.
- Can I use the tax credit for my down-payment? The Federal Government is currently working a program to partner with institutions who would give short-term loans against your tax credit that could be used for the down-payment, then repaid once you receive your tax refund. This program is still being worked out, so contact me for the latest details if you need to use this program as your down-payment.
I have included a contact form below if you need any questions answered that I have not covered above, or if you need more current information on using the tax credit for the down-payment on your new home. Thank you.