Home Buyer’s Tax Credit: Extended and Expanded

New legislation, the Worker, Homeownership and Business Assistance Act of 2009 extends and expands tax credits for buying a home.  The new law extends the First-Time Home Buyer Tax Credit of up to $8,000 until April 30, 2010 – originally scheduled to expire November 30, 2009.  The law also expands the credit to grant up to $6,500 to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.

For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500.  They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased. Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Other details include the price of the house being capped; no credit is available for any home costing more than $800,000.  The actual tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000 for first-time buyers or $6,500 for move-up/repeat buyers.  All taxpayers who claim a credit must use the home as a principal residence for the next three consecutive years.  Taxpayers do not qualify for a credit if they buy from a lineal ancestor or descendant, including parents or grandparents and children or grandchildren.

Our own United States Senator, Johnny Isakson, shared these words in a recent email, “I realize cost is a great concern as our nation faces unprecedented debt levels. During negotiations on this tax credit, I insisted that the extension and expansion be paid for so that it will not add to our debt. I believe home sales not only stabilize the housing market, they boost our overall economy.  Research shows each home sale has a positive economic impact on our overall economy. By restoring Americans’ equity in their homes, we increase American consumer confidence and optimism.  I believe this tax credit will swiftly help our economy get back on track.”  Closings have certainly increased in our office and perhaps this is just the next step in the American recovery.

MORE RESOURCES

PDF detailing the Homebuyer tax credit changes fromt he National Association of REALTORS

You can also listen to the NAR President’s podcast about the changes:  Special+Edition+Presidents+Podcast_110509

If you are interested in taking advantage of these tax credits, please contact us at 678-741-2060 or info@maxsell.net