THE FIRST-TIME TAX CREDIT IS NOT ONLY BEEN EXTENDED BUT IT IS BETTER THAN EVER. THE FOLLOWING ARE THE ANSWERS TO YOUR QUESTIONS. NEW ADDITIONS ARE UNDERLINED.
Who Qualifies for the Tax Credit?
Who qualifies as a "First Time" Homebuyer:
People who have not owned their primary residence within the last three years prior to closing and transfer of title. The tax credit for qualified First Timers is 10% of the purchase price of the home, with a maximum available credit of $8,000.
If Buyers have owned a vacation home or investment property during the past 3 years, that would NOT disqualify them from qualifying as First Time Homebuyers.
Who qualifies as a "Current Owner" Homebuyer:
Homeowners who already own their primary residence and have occupied it for 5 consecutive years during the last 8 years. The tax credit for Current Owners who buy a replacement primary residence is a credit of up to $6,500.
Deadlines for Contracts and Closings:
In order to qualify for the tax credit, all contracts must be in effect no later than April 30, 2010 and the closing must take place not later than June 30, 2010.
Maximum Income:
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are not eligible for the tax credit.
The Maximum Purchase Price:
The Maximim Purchase Price that qualifies for the tax credit is $800,000.
How Much of the Purchase Price is Eligible for the Tax Credit?
For First Time Homebuyers: Up to 10% of the Purchase Price, to a MAXIMUM of $8,000.
For Current Owner Homebuyers: Up to 10% of the Purchase price, to a MAXIMUM of 6,500.
A tax credit is a discount from the amount of federal income tax that a taxpayer owes to the Internal Revenue Service (IRS). If the taxpayer doesn't owe any taxes, the IRS will issue a check for the amount of the tax credit to which the Taxpayer is entitled.
The new law does NOT require the taxpayer to REPAY the tax credit. However, anyone who collects the tax credit and then sells the home within three years must return the refund.
This document is not intended as legal or tax advice. Buyers should consult their tax advisor for professional tax advice.
