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First-Time Homebuyer Tax Credit (Extended)
Congress and the President have extended and expanded the $8,000 tax credit for first-time buyers. You now have until April 30, 2010 to sign a contract and qualify. AND, starting November 7, many existing home owners also qualify.
• The temporary credit is only available for the home purchases that of to contract before May 1, 2010, and that close before July 1, 2010.
• It’s equal to 10% of the cost of the home, up to a maximum credit of $8000. (For example, a home purchased for $80,000 or more would qualify for the full $8,000 credit, while a $70,000 home would qualify for only 10%, or $7000.) But homes that cost more than $800,000 are ineligible for any tax credit.
• This is a tax credit, which is even better than a tax deduction; it’s subtracted directly from your tax liability. If the credit is more than your total tax liability that year, you will receive a refund check for the balance. (Note that a married buyer filing separately is only eligible for up to a $4,000 credit.)
• Eligible properties include anything that will be used as a principal single-family residence, including condos and townhouses.
• First-time homebuyers can take advantage of the full $8,000 tax credit. A first-time buyer is defined as an individual who has not owned a home the past three years. For married joint filers, both must meet the first-time buyer criteria to take the credit on a join return.
• Existing homeowners who have lived in their current homes for five consecutive years out of the past eight are eligible for up to a $6,500 tax credit when they purchase a new home.
• There are income guidelines on the credit. Individuals with an adjusted gross income up to $125,000 (or $250,000 if filing jointly) are eligible for the full tax credit. The credit is phased down for those earning more and is not available for those with an income above $145,000 (or $245,000 if filing jointly.)