Home Buyer Tax Credit - Income Limits

Home Buyer Tax Credit - Income Limits

I was talking to a client the other day.  She lives in what we in Hoover, Alabama would call an "upper bracket" neighborhood.  Now I realize what is considered Upper Bracket in California or NYC or Washington D.C., pricewise is not the same as the greater Birmingham, Alabama area, but this neighborhood and her house are VERY NICE.  She's been thinking about downsizing, part because she doesn't need quite so much space and part because she wants to reduce her monthly payments.  We were discussing if this would be a good time to list HER HOME for Sale.

As part of the overall picture, I mentioned the Home Buyer Tax credit that was put in place in November to help stimulate the economy. This Home Buyer Tax Credit will be ending on April 30, 2010. Should we consider a $6500 tax credit a motivator for someone to buy a home - let's say is WELL ABOVE the median for the area.  Well, $6,500 is $6,500 and anyone could use money in their pocket.  This would be a terrific time to Buy A House and I would say a good time to Sell A House in Hoover, Alabama.

 There are SOME limitations, though.

The maximum sales price on a house that qualifies for the tax credit is $800,000.  Now, that probably limits a lot of properties in California, but here, at this very moment, there are 12,326 homes for sale in Birmingham, Alabama.  Of those, 12,015 are under $800,000.  Now THAT is a LOT of inventory to choose from. Here is an example of a home in Homewood that could be YOURS for under 800K. Click on the picture for additional photos.

The other limitations are Income Limitations. When the new Home Buyer Tax Credit went into effect in November, the income limitations were raised. If you are single and make up to $125,000 (modified adjusted gross income on your tax return) you qualify for the tax credit.  Married couples filing jointly can make up to $225,000 (MAGI).  You can get a partial credit if you make between 125,000-145,000 (single) and 225,000-245,000 (couple). 

You would want to verify this with your lender - or if you don't have one give Chuck Binzel at Hometown Mortgage a call - because everyone's situation is different, however, if you make $125,000 per year, by my calculations, if you didn't have a lot of debt, you should be able to qualify for OVER 500K of house with today's interest rates. If you put 20% or more down you will raise that amount considerably. That is just a single person - a married couple could afford a lot more.  

If you'd like to know more about the Home Buyer Tax Credits, there is good information on the National Homebuilder's website. 

Any Home with a Sales Price up to $800,000 will qualify for the Home Buyer's Tax Credit.  A Home is defined as a single family detached residence, townhome, condo, manufactured housing, and houseboat - hummmm houseboat that's an interesting thought.

If you would like to see the homes for sale in Birmingham Al, you can see all available properties on my website.  Last time I looked there were NO houseboats.