WOOHOO! $8,000 Tax Credit extended and Expanded!

Homebuyer Tax Credit Update!

On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers April 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs):First-time homebuyers (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 amount.

Current Owners: 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.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

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.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

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.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.
  
What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes 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.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

  • They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
  • They do not use the home as your principal residence.
  • They are a nonresident alien.
  • They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

 Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.

As always regarding tax talk, check with your own personal tax advisor to discuss your situation to confirm you qualify.

15 thoughts on “WOOHOO! $8,000 Tax Credit extended and Expanded!”

  1. citibank

    I was just chatting with my friend about this today at the resturant. Don’t know how we landed on the topic actually , they brought it up. I do remember eating a excellent fruit salad with sunflower seeds on it. I digress…

  2. Bernardo Hernandz

    Hello. Great job, if I wasn’t so busy with my school work I read your total site. Thanks!

  3. paris travel deals

    I was looking for this the other day. i dont usually post in forums but i wanted to say thank you!

  4. chanel handbags

    Believe you have to consider all aspects in the current economic climate – personally do no think we have seen the full extent of the recesssion, so would be cautious in considering.

  5. Danelle Mejias

    I really like following your blog as the articles are so simple to read and follow. Excellent. Please keep up the good work. Thanks.

  6. e cigarette

    Whats happening, I discovered this website by error when I was browsing Yahoo ,next I got to your blog. I need to say your site is interesting I really like your theme! Today I don’t have the free time at the current moment to fully browse your sitebut I have bookmarked it. I will be back in a day or two. Thanks for a good site.

  7. Pingback: Kylie Batt1
  8. mesothelioma symptoms

    This is an interesting article. Thanks for sharing.

  9. Pingback: Kyle Nopeman
  10. Alesia Roques

    I must say you have a cool post. This hit the spot and then some! Thanks for posting this and sharing it with the world. I’ve just bookmarked your site. And I will check back soon to read your other articles. Keep up your awesome work.

  11. Pingback: Kyle Nopeman
  12. Pingback: Kyle Nopeman
  13. Pingback: Kyle Nopeman
  14. Emmav Yasko

    Yeah, Hey I think you have a great blog going here,I found it on Bing and plan on returning regularly for the information that you all are providing. 😀

Comments are closed.