Congress has made a few moves in the last few weeks to ad stimulus to the Real Estate Market. The packages really contain 3 key components.
1. The conforming loan limit increase to 729,750 in high value areas has been extended to September 30, 2010.
2. The first time home buyer tax credit of $8,000 has been extended to June 30, 2010. The credit is actually 10% of the purchase price with a maximum of $8,000, so any transaction over $80,000 qualifies for the maximum. A first time buyer is a buyer that has not owned a home for at least 3 years.
3. A new tax credit of $6,500 has been added for current owners who have owned a primary residence for 5 out of the last 8 years. There is no requirement to sell their home, but the new home must be their primary residence to get the tax credit. These transactions must also close by June 30, 2010. Both tax credits have the following income price and other requirements.
The maximum income cap has been raised for single tax filers to $125,000 to receive the full $8,000 and it gets reduced to a partial credit until the income exceeds $145,000 where it becomes 0. The maximum income cap for joint filers has been raised to $225,000 to receive the full $8,000 credit and it gets reduced to a partial credit until the income exceeds $245,000 where it becomes 0.
The maximum purchase price to qualify for the tax credit is $800,000. The home must be a primary residence. The home can not be bought from a close relative which includes a spouse, parent, grand parent, child or grand child and some step-relatives. They may not sell the home before the end of the year. They can not be a nonresident alien.
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