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President Signs New Homebuyer Tax Credit

homebuyer tax creditPresident Obama signed the bill that included the new Homebuyer Tax Credit yesterday, extending and expanding the First Time Home Buyer Credit that was set to expire on November 30, 2009.  The new credit is no longer limited to first time homebuyers and now includes buyers who are selling or have recently sold their home. 

The details of the credit are fairly complicated  and you’ll need to factor in the dates of your purchase relative to the enactment of the legislation. Consult your accountant or tax practitioner to determine your eligibility for the credit.

Here are some highlights of the new bill:

Who Is Eligible For A Homebuyer Tax Credit?

  • A buyer qualifies as a first time home buyer if he or she has not owned a home in the three years prior to the purchase
  • Homeowners buying a home who have used their previous home as a primary residence consecutively for five of the previous eight years

How Much Is The New Credit?

  • First-time buyers – $8000 or $4000 married filing separately
  • Current homeowner – $6500 or $3250 married filing separately

When Does The New Homebuyer Credit Expire?

  • Buyer must have a written binding contract to purchase in place by April 30, 2010
  • The homebuyer has until July 1, 2010 to close

Is There A Home Purchase Price Limit For The Credit?

  • Yes. The home purchase price is now capped at $800,000. 

What Are the Income Limits For The Home Buyer Credit?

The income limits have been increased with the new credit.  Previous income limits are in parentheses.

  • $125,000 single ($75,000)
  • $225,000 married ($150,000)
  • Additional $20,000 phase out

 Low interest rates, a tax credit, and lower prices – it’s good to be a buyer right now.  Looks like the spring real estate market will start early this year!

Categories: Buyer Info

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