Time is running our for Lake Havasu first-time home buyers to take advantage of the First-Time Home Buyers Tax Credit. It is September already! This means you only have a few more weeks to locate a home and close escrow before the November 30, 2009 deadline.
Don't Wait or You May Lose Out
At this time, there is no extension to the tax credit, even if you are in escrow. Sometimes, delays occur and escrow extends the expected timeline. Loan processing may take a little longer than is expected or there may be some issue that would come up in escrow that would take time to resolve. No matter what the reason for the delay, you will lose the tax credit if escrow does not close on or before November 30. So, opening escow as soon as possible is critical.
Tax Credit Advantages
* Dollar-for-dollar credit - the credit is deducted from the money you owe the IRS; any balance is refunded to you.
* The money is free - there is no pay back required, ever.
* In some cases, the tax credit can be applied towards your down payment or closing costs; any remaining funds will be credited to you.
Who is a First Time Home Buyer?
* Anyone who has not owned a home within the past three years.
How Much is the Tax Credit?
* 10% of the purchase price up to $8,000.
Income Limits
* $75,000 for singles.
* $150,000 for married couples filing a joint return.
* The tax credit is reduced for buyers with a modified adjusted gross income (MAGI) of more than $75,000 (single) or $150,000 (married, filing a jointly).
* There is a phase out tax credit for those earning more than the income limit - contact a qualified tax professional to see if you qualify.
* Partial credits are available for some home buyers whose MAGI exceeds the phaseout limits - contact a qualified tax professional to see if you qualify.
Restrictions
* The home purchased must be your principal residence.
* You must live in the home for three (3) years - if you change residences before that time, you must repay the credit.
There has been much talk of extending or expanding the tax credit. But, as it stands for now, the opportunity to take advantage of the tax credit will soon go away. Remember, you must close escrow on or before November 30. The contract date will not matter. It is the closing date (the date you officially become the owner) that will determine your eligibility for the First-Time Buyers Tax Credit.
Donna Ball, Always on the Ball with Lake Havasu City real estate
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