For those buyers out there who are still on the fence about buying a home in time for the First Time Home-Buyer credit.. The time is now...

Some information forwarded to me from a friend of mine but is important information I felt I should share with all consumers that are waiting for that special house to come along...... I suggest you step up your search now and find a home that you can live in now.... Just some timely advice from your Bergen County Real Estate Team.

The First-Time Home-buyer Tax Credit

Recent changes to the first-time homebuyer tax credit mean you might be able to benefit from the credit, even if you're not actually a first-time homebuyer. To take advantage of the credit, however, you have to act by May 1. Here are the basics as they apply to home purchases in 2010.

Qualifying for an $8,000 credit

If you, and your spouse if you're married, haven't owned a principal residence in 3 years, you may qualify for a credit worth 10% of the purchase price of a home, up to $8,000 ($4,000 if you're married and file a separate federal income tax return). The home has to be your principal residence, and must be purchased before May 1, 2010. If you enter into a written binding contract before May 1, 2010, you can still qualify for the credit if you close on the home before July 1, 2010.

Qualifying for a $6,500 credit

If you, and your spouse if you're married, have maintained the same principal residence for at least 5 consecutive years in the previous 8 years, you may qualify for a credit if you purchase a new principal residence. While the credit remains 10% of the purchase price of the new home, it's capped at $6,500 ($3,250 if you're married and file a separate federal income tax return). As with the $8,000 credit, the home must be purchased before May 1, 2010 (or you must close on the home by July 1, 2010, after entering into a written binding contract before May 1, 2010).

Limitations

There are several limitations that apply (the same limitations apply to both the $8,000 credit and the $6,500 credit):

• The credit is reduced if your modified adjusted gross income (MAGI) exceeds $125,000 and is completely eliminated if your MAGI reaches $145,000. If you're married and file a joint return, the credit is reduced if your joint MAGI exceeds $225,000 and is eliminated if your MAGI reaches $245,000.
• You can't claim a credit if the purchase price of your principal residence exceeds $800,000.
• You can't claim a credit if you're under age 18 at the time of purchase (unless you're married and your spouse is at least 18), or if you can be claimed by someone else as a dependent.
• You can't claim a credit if you purchase a principal residence from someone who is closely related to you or your spouse.
• You can't claim the credit if you're a nonresident alien.

Payback requirements

Generally, if you qualify for the credit as a result of a 2010 home purchase, you won't have to worry about repaying the credit. There's one important exception, however: if the home ceases to be your principal residence in the 36 months following the purchase, you'll have to pay the credit back. (If you're married at the time of purchase, the home must remain the principal residence of either you or your spouse for the 36-month period.) If you have to pay back the credit, you'll do so on the tax return for the year in which the home ceased being your principal residence.

Treating a 2010 purchase as made in 2009

If you purchase a qualifying principal residence in 2010, you can elect to treat the purchase as if it occurred on December 31, 2009, allowing you to claim the credit on your 2009 federal income tax return.




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