Changes To The First Time Home Buyer Home Buyer Credit Affect Many
The First Time Home Buyer Credit has been changed and is now not only for First Time Home Buyers, but for qualifying existing homeowners as well.
The criteria for the First Time Home Buyer remain essentially the same, may not have had an interest in a principal residence for three years prior to the purchase. The income limits, however, have been increased to a Modified Adjusted Gross Income of $125,000 for a single person and $225,000 for a married couple. Above that it phases out allowing for partial credit. The Credit for the First Time Buyer is the same, 10% of the purchase price up to $8,000, or $4,000 if married filing separate. There is, however, an $800,000 limit on the price of the home where there was previously not a price limitation.
For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to 10% of the purchase price, up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. The keyword is consecutive - it is not "five of the last eight", it is five consecutive during the last eight. Caution: The law says that they must be selling, or have sold a home, but we have not been able to find any language about having to actually sell a home to qualify, or merely list it for sale. This may be forthcoming in the future as details are clarified, but for now understand that there seems to be an intent in the way the bill was written to have it apply to persons replacing their primary residence. Get details before you make a purchasing decision based on getting the Credit.
A Credit will not be received if a Buyer: a. Buys the home from a close relative, i.e.- a spouse, parent, grandparent, child or grandchild., b. Does not use the home as a principal residence., c. Sell the home before the end of the year., d. Is a nonresident alien. Remember, too, that the entire Credit amount must be repaid if the home is sold within three years. Mobile homes, with and without real estate, can qualify. Recreation vehicles with a built-in motor not affixed to land do not qualify, but if you have lived in such an RV for the past three years you may qualify as a First-Time Homebuyer. Travel Trailers affixed to land may qualify. Confirm the details of your desired transaction for compliance.
Our advice: The new changes reflect the lessons learned from the first two versions of the Credit. Allegations of widespread fraud were made by those opposing the extension of the Credit. That has been mitigated by the new requirement to attach purchase documentation, closing statement, to the tax return. The expansion of the income limitations make it available for more people. Partial credits are available if you exceed the limits - check with your accountant to see how you would be affected. The opportunity to close up to two months after the expiration of the extension is reasonable and practical. Have a written binding contract by April 30, 2010 and you have until July 1st to close the escrow.
The extension and closing cushion provided for after April 30th gives ample opportunity to partake in this market. Whether private party, bank owned or even short sale properties, you can get it done within that time frame if you take action in a reasonable time. Prices are great, interest is great, and you'll get "paid" to buy a home ... what are you waiting for?
When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com
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Lisa Wetzel and Jim Valentine are the authors of this blog. Lisa, Jim and Jessie are experts in Carson Valley , Carson City and the tri-county area of Douglas County , Carson City and Lyon County. Call our team anytime at 775-781-5472 or 775-781-3704. To Search for Homes go to: Carson Valley Listing Book or visit our website at www.CarsonValleyLand.com
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