Can You Buy A Foreclosure AND Use the Homebuyer Tax Credit?
You hear all about the great deals people are getting on foreclosed homes lately. There are several on the market. The home on the left is for sale in Pelham, Alabama. THIS ONE is a Great Buy at $299,900. Some are good deals and others are a nightmare. Remember, foreclosed homes - which are homes that have been taken away from people who bought them and then didn't pay for them are sold AS IS. Most are sold by banks and they just won't do repairs - that is why you get such a good price.
Many foreclosed homes are purchased by investors who fix them up to sell. Since they don't meet the rules for the Home Buyers Tax Credit, they would not get the credit. But, anyone who meets the home ownership/occupancy rules can certainly take the credit.
If the investor buys the home first, and fixes it up, then turns around and sells it to YOU, then you can take the Home Buyer Tax Credit - as long and you meet the other ownership rules.
What are the ownership rules you say!!
First off, you need to live in the house for at least 3 years or you will have to pay the credit back.
Next there are 2 types of Home Buyer Tax Credits, either one will work with a foreclosed home.
#1 A tax credit of 10% of the purchase price of the home up to $8000 is available for first time home buyers who buy a home between 1/1/2009 and 4/30/2010 (if a home purchase is under contract by 4/30/2010 the buyer has until 6/30/2010 to close). A First Time Home Buyer is defined as someone who hasn't owned a home in the last 3 years.
#2 A Tax Credit of 10% of the purchase price of the home up to $6500 is available for repeat homeowners who have owned and resided in a home for 5 consecutive years out of the last eight. This repeat Home Buyer Tax Credit applies to home sales between 11/6/2009 to 4/30/2010 (if a purchase is under contract by 4/30/2010 they have until 6/30/2010 to close). If you own more than one house when you buy the new house you don't qualify.
So, there are lots of foreclosed homes out there to choose from (like the home on the right which is listed for $145,000) AND the Home Buyer Tax Credit is YOURS if you qualify. You apply fo the tax credit when you file your tax return - no up front application. Just make sure you meet the requirements of the program and BUY that foreclosure BEFORE April 30, 2010.
Both of the homes you see here are foreclosed homes and are move in ready. Click on the picture of the front of the house for additional pictures. If you would like to look at these or any other foreclosed home, let me know at Toni@ToniBird.com.