Good News! Home Buyer Tax Credit Extended!

By: Christine Macrenaris

The ongoing discussion whether or not the government will provide an extension for the homebuyer Tax Credit is finally put to rest! The President signed the bill into law today that extends homebuyers and unemployment benefits.  While the first Tax Credit program of 2009 focused on first time buyers, the addition of the repeat buyers will free up the middle market by allowing homeowners to sell to first time buyers and allow these buyers to “move-up”.  Finally there is an answer for buyers who continue to ask “what’s in it for me?” Below are highlights of how the homebuyer tax credit will work:

• Tax credit: Ten percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for repeat buyers who purchase between December 1, 2009 and May 1, 2010. First-time homebuyers are defined as people who have not owned a home in the previous three years. Repeat buyers must have owned their current home at least five years. The credit cannot be used for houses costing more than $800,000.
• Deadline for qualifying: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.
• Military deadline: The deadline is extended by a year for members of the military who have served outside the U.S. for at least 90 days from Jan. 1, 2009, to May 1, 2010.
• Income limits: Individuals with annual incomes up to $125,000 and joint filers with incomes up to $225,000 qualify for the full credit. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
• How to apply: Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
• New anti-fraud limitations imposed.
• Cost: $10.8 billion.

Source: Bloomberg Press and Associated Press and confirmed information with the content of the Senate bill