Tips for first-time and repeat homebuyers to take advantage of credit
By Rick Laws
Sonoma County homebuyers and consumers across the country received an early holiday gift this month as Congress not only extended the first-time homebuyer tax credit, but expanded it to include many existing homeowners buying another property. This is truly exciting news that will not only benefit both buyers and sellers, but should help the fragile housing market recovery continue to gain momentum.
The new bill, signed into law by President Obama, creates a new incentive for current homeowners who have owned their property for at least five years to receive tax credits of up to $6,500 when they purchase a new home. At the same time, first-time homebuyers – and those who haven’t owned in the past three years – would still get tax credits of up to $8,000.
The current homebuyer tax credit has had a very real and positive impact on the housing market this year. Economists with the National Association of Realtors estimate that the tax credit has contributed approximately $22 billion to the general economy, with approximately two million first-time home buyers taking advantage of the program to get into a home.
There are a number of requirements for the new tax credit bill, which I’ll briefly cover in this column. But most importantly, both first-time homebuyers and move-up or repeat buyers need to get moving quickly. Both groups have just until next spring – April 30 to be exact – to sign a purchase agreement and they must close escrow by June 30. It’s unlikely that Congress will extend these credits again as the economy begins to recover.
Here are some highlights of both the first-time home buyers and repeat buyers tax credits:
- For first-time home buyers (and those who haven’t owned a principal residence for three years), the credit is equal to 10 percent of the home’s purchase price with the maximum credit of $8,000.
- The tax credit applies only to homes priced $800,000 or less, and applies to sales occurring between January 1, 2009 and April 30, 2010, with the home purchase completed by June 30, 2010.
- For homes purchased before November 6 of this year (the current tax credit period) the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
- For homes purchased after November 6 and before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
- For repeat or move-up buyers, to be eligible to claim the tax credit they must have owned and lived in their previous home for five consecutive years out of the last eight years.
- * The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500 in tax credits. Only homes priced $800,000 or less qualify.
- The credit is available for homes purchased after November 6 and on or before April 30, 2010, with the sale completed by June 30, 2010.
- Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.
- For both buyers, even if your income exceeds the limit for the full credit you may be eligible for a partial credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly.
- Buyers – either first-timers or repeat buyers – do not need to repay the tax credit, as long as they occupy the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Because these issues are complicated and involve tax laws, you should contact your tax professional for more information. You can also get information online by visiting the National Association of Realtors, the National Association of Home Builders or the IRS site,
As you begin your home search, make sure you start by contacting an experienced, professional Realtor who is knowledgeable about the community in which you’re interested in buying. They will simplify the process and work with you every step of the way to make your dreams of home ownership come true.
Congress Extends – and Expands – Homebuyer Tax Credit
Tips for first-time and repeat homebuyers to take advantage of credit
By Rick Laws
Sonoma County homebuyers and consumers across the country received an early holiday gift this month as Congress not only extended the first-time homebuyer tax credit, but expanded it to include many existing homeowners buying another property. This is truly exciting news that will not only benefit both buyers and sellers, but should help the fragile housing market recovery continue to gain momentum.
The new bill, signed into law by President Obama, creates a new incentive for current homeowners who have owned their property for at least five years to receive tax credits of up to $6,500 when they purchase a new home. At the same time, first-time homebuyers – and those who haven’t owned in the past three years – would still get tax credits of up to $8,000.
The current homebuyer tax credit has had a very real and positive impact on the housing market this year. Economists with the National Association of Realtors estimate that the tax credit has contributed approximately $22 billion to the general economy, with approximately two million first-time home buyers taking advantage of the program to get into a home.
There are a number of requirements for the new tax credit bill, which I’ll briefly cover in this column. But most importantly, both first-time homebuyers and move-up or repeat buyers need to get moving quickly. Both groups have just until next spring – April 30 to be exact – to sign a purchase agreement and they must close escrow by June 30. It’s unlikely that Congress will extend these credits again as the economy begins to recover.
Here are some highlights of both the first-time home buyers and repeat buyers tax credits:
Because these issues are complicated and involve tax laws, you should contact your tax professional for more information. You can also get information online by visiting the National Association of Realtors, the National Association of Home Builders or the IRS site,
As you begin your home search, make sure you start by contacting an experienced, professional Realtor who is knowledgeable about the community in which you’re interested in buying. They will simplify the process and work with you every step of the way to make your dreams of home ownership come true.