Published on November 19, 2009
Written by The Servion Group
On November 6th, the President signed legislation to extend the First-Time Homebuyer Tax Credit until April 30, 2010.
There are several differences in the extended program, the biggest of which is that current homeowners may be eligible for the tax credit under the extended plan.
Under the Extended Program, the buyer's tax credit amount is determined by the price of the home and the buyer's income. Tax credits may only be awarded on homes purchased for $800,000 or less. Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may be eligible for the maximum credit.
The credit decreases for buyers who earn between $125,000-$145,000 for single buyers and between $225,000-$245,000 for homebuyers 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 for singles and over $245,000 for couples are not eligible for the credit. These income limits have changed from the original First-Time Homebuyers Tax Credit limits.
The maximum tax credit under the extended program is $8,000 for first-time homebuyers and $6,500 for current homeowners. To be considered a first-time homebuyer, the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase. Current homeowners who have used the home being sold or vacated as a principal residence for 5 consecutive years within the last 8 may qualify for the Extended Tax Credit.
The Extended Tax Credit may be applied to primary residences including single-family homes, condos, townhomes and co-ops.
Under the extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close and may still qualify for the tax credit.
Buyers will not need to pay back the tax credit as long as 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.