On November 6, 2009 President Obama signed into law new legislation that extends the first-time home buyer tax credit beyond its Nov. 30 deadline and expands it to a wider group of home buyers. Combined with historic low interest rates, competitive home prices, and affordable materials and labor costs, the newly extended and expanded tax credit could make this the best possible time to build or buy your next home. Below is a video that explains the facts and answers many of the most frequently asked home buyer questions regarding the tax credit. Highlights of the extended and expanded credit are detailed below. You can also get even more information by visiting www.federalhousingtaxcredit.com
Highlights
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The unemployment extension bill that was signed into law on Nov. 6 by President Obama has major benefits for both new and existing home buyers.
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It extends the $8,000 tax credit until April 30, 2010, for first-time home buyers.
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Further, a new $6,500 tax credit has been created for repeat buyers who are purchasing a principal residence during the same period.
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Repeat buyers can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight.
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Both categories of home buyers have until June 30, 2010, to close on the home after signing a contract prior to May 1, 2010.
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In more good news, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for couples.
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Single taxpayers earning between $125,000 and $145,000 can claim a partial credit of less than $8,000 for a first-time home buyer and $6,500 for an existing buyer, while the phase-out for married couples ends for those earning above $245,000.
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Buyers can claim the tax credit on their 2009 or 2010 income tax return.
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The tax credit does not have to be repaid. However, home buyers must use the residence for at least three years or face recapture of the credit amount.
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Since tax credit is fully refundable, it means that the home buyer can claim the credit even if they owe little or no federal income taxes. In other words the government would write you a check.
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For example, if a home buyer owes the government $3,000 in federal taxes and qualifies for the $8,000 home buyer tax credit, the taxpayer would receive a $5,000 refund check from the IRS ($8,000 minus the $3,000 owed).
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Homes over a purchase price of $800,000 do not qualify.
Act Soon to Take Advantage of the Home Buyer Tax Credit
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Like all good things in life, the tax credit won’t last forever.
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Even as the bill neared passage, proponents of the home buyer tax credit made it explicitly clear that the extension would have a limited shelf life and not be extended again when it expires next year.
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Sen. Johnny Isakson (R-Ga.), a long-time champion of the home buyer tax credit, said, “This is the last extension of the home buyer tax credit. Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back.”
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On the floor of the Senate, Finance Committee Chairman Max Baucus (D-Mont.) said: “It is important that this tax credit does not become a permanent fixture in the tax code.” Baucus added that the seven-month extension of the tax credit would be “long enough to encourage home buyers to buy homes, but it’s short enough to remain fiscally responsible.”
A Great Home Buying Opportunity
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Current market conditions are excellent. With the home buyer tax credit now available to a much broader group of consumers, it adds up to an unprecedented opportunity for home buyers.
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Mortgage interest rates are near 5 percent – the lowest level in decades.
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There is a great selection of homes to choose from.
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Home values in many markets are at the lowest level since 2003.
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Many builders have inventory that is “move-in ready,” and they may offer upgrades or other incentives to seal the deal.
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Likewise, owners of existing homes who are looking to trade-up or relocate are ready to bargain.
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Add it all up and there may never be another buyer’s market as good as today’s.