Take Advantage of Home Buyers’ Tax Credits
Within the past week, I have had at least 3 inquiries as to whether someone would qualify for the extended tax credit. There are two Tax Credits we’ll discuss in this article; the First Time Homebuyer Credit, and The Homeownership and Business Assistance Act of 2009. The guidelines can be somewhat confusing, therefore, I’ll attempt to provide a little clarification in the following paragraphs.
First Time Homebuyer Credit:
If you have not owned a principal residence during the three years prior to the purchase date then there is a great chance you may qualify for the First Time Homebuyer Credit. The purchase date must have occurred after April 8, 2009 and before May 1, 2010 with a closing date prior to July 1, 2010. The credit is equal to 10% of the purchase price with a maximum of $8000. If you take advantage of the tax credit, you must reside in the home, as a primary residence, for three years or you will have to repay the tax credit.
A couple of rules that are attached to the tax credit are as follows: First, the property cannot be purchased from a relative. Second, married taxpayers must both qualify as first time homebuyers if they file their taxes jointly.
The Homeownership and Business Assistance Act of 2009:
The Homeownership and Business Assistance Act of 2009 extended the tax credit from November 30, 2009 to April 30, 2010. That means there must be a binding contract in place prior to April 30, 2010 and closing must occur before July 1, 2010. With this extension came a few more guidelines for those who purchased homes after November 6, 2009: First, you must be 18 years of age on the purchase date and cannot be claimed as a dependent. Second, if married, at least one of the spouses must be 18 or older. Third, the purchase price cannot exceed $800,000.
Current homeownersare not being left out of this tax credit. The Homeownership and Business Assistance Act modified the credit to include current homeowners who have lived in their same principal residence for a five consecutive year period. They are eligible for a credit of up to $6500 if the home is purchased before April 30, 2010. Homeowners looking to purchase a replacement primary residence must be in a binding contract after Nov 6, 2009 and before May 1, 2010 with a closing date on or before July 1, 2010.
For sales occurring after November 6, 2009, the Act establishes income limits of $125,000 for single taxpayers and $225,000 for married couples filing joint returns.
The income limits for sales occurring on or after January 1, 2009 and on or before November 6, 2009, are $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns.
For homes purchased in 2009, tax credits must be claimed on their 2009 income tax return. For 2010 purchases, those can be claimed on either the 2009 or 2010 income tax returns. So, for all you readers who are contemplating a purchase in the Fredericksburg Real Estate market and surrounding areas, now is the time to buy.
Category : Blog