TAX CREDIT INFO

By
Real Estate Agent with Prudential Fox and Roach REALTORS

THE EXPANDED HOME BUYER

TAX CREDIT COULD CHASE

AWAY THE WINTER BLUES

 

This column is brought

to

you by the NAR Real Estate

Services group

By Ken Trepeta

As we begin 2010, both real estate professionals

and home buyers have something to look forward

to and, more importantly, take advantage of-the

extended and expanded home buyer tax credit.

Originally created in 200S, the home-buyer tax credit

has evolved from a $7,500 credit, which had to be repaid

by the home buyer over the course of 15 years,

to an $8,000 tax credit with no repayment required

in 2009. Now, for a limited time in 2010, the $8,000

home buyer tax credit will still be available to first-time

home buyers and certain current homeowners will also

be eligible for a $6,500 credit.

To help everyone better understand the extended

and expanded home buyer tax credit, here are some

highlights of the changes.

Who Can Claim the Credit?

First-time home buyers who purchase homes between

November 7, 2009 and April 30, 2010 are eligible for

the credit. To qualify as a "first-time home buyer," the

purchaser or his/her spouse may not have owned a residence

during the three years prior to the purchase.

For current homeowners purchasing a home during

the same time frame, they are also eligible for a

tax credit, so long as the home being sold or vacated

was their principal residence for five consecutive years

within the last eight. To elaborate, it must be the same

home; it is not enough that they have been homeowners

for five consecutive years, they must have been in

the same home for five consecutive years.

Another key point is that the existing home does not

need to be sold. One must, however, occup}' the new

home as a principal residence and do so for three years

or risk recapture of the credit. Also, the new home does

not need to cost more than the old home despite the

concept that it is directed at "move-up" buyers.

How Much Is the Credit and What Are the Income limits?

The maximum allowable credit for first-time home

buyers is $8,000 or lO(i'b of the sales price, whichever

is less. For current homeowners, it is $6,500 or 10% of

the sales price, whichever is less. Under the extended

home buyer tax credit, single buyers with incomes lip

to $125,000 and married couples with incomes up to

5225,000 may receive the maximum credit.

The credit decreases for single buyers who earn between

$125,000 and $145,000 and between $225,000

and $245,000 for home buyers filing jointly. The

amount of the tax credit decreases as his/her income

approaches the maximum limit. Home buyers earning

more than the maximum qualifying income--over

$145,000 Ior singles and over S245,OOOfor couplesare

not eligible for the credit.

What Are the Deadlines for Qualifying for the Credit?

Under the extended home buyer tax credit, as long as

a written binding contract to purchase a home is in effect

011 April 30, 2010, and the deal is closed by July 1,

2010, one can claim the credit.

Will the Tax Credit Need to be Repaid?

No, the buyer does not need to repay the tax credit

if he/she occupies the home for three years or more.

However, if the property is sold during this three-year

period, the full amount of the credit will be recouped

on the sale. Another provision of the law waives the

recapture provisions for service members who receive

orders that require them to move.

Are There AnyOther Critical Provisions?

There are three provisions people should be aware of:

- There is an $1')00,000 limitation on the cost of the

home.

- The purchaser must be at least 18 years old on the

date of purchase.

- For a married couple, only one spouse must meet this

age requirement and dependents are not eligible to

claim the credit.

For more information, including the required IRS

forms, please contact the Internal Revenue Service at

800-829-1040. RE

Ken Trepeta

is the director of

the Real Estate Services program for the

RISMedia's REAL ESTATE 13

Comments (1)

Ken's Home Team LLC. | 360.609.0226 | Portland, OR & Vancouver, WA Real Estate Team
Ken's Home Team LLC. - Vancouver, WA
- SOLD IS OUR FAVORITE 4 LETTER WORD -

I have seen a spike in my business I want it to keep going!!!

Jan 18, 2010 01:32 AM