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Tax Credit

The Federal Tax Credit Has Been Extended And Expanded

Good news for 1st-time home buyers and for homeowners who have lived in their current home for 5 years!

The federal government has extended the $8,000 tax credit for 1st-time home buyers who purchase their home before the deadline. The tax credit is fully refundable.  What that means is the home buyer will get the refund even if their tax bill is less than $8,000. That’s right, you could get back more money than you paid in taxes if you qualify for the credit! There’s no need to wait for the end of the year to file for the credit with your taxes; a buyer can file for the credit as soon as the home is purchased by amending a previous return .

What does “1st time home buyer” mean? Basically, if you have not owned your own home in the last 3 years, you qualify as a 1st-time home buyer.  If you owned your own home prior to that, it does not matter, you still are considered a 1st-time home buyer.

The tax credit is also being offered to home buyers who have lived in their current home for 5 consecutive years out of the last 8 years. Buyers can qualify for up to a $6,500 tax credit that is also fully refundable. “Move-up” buyers or homeowners looking to downsize can now also participate in the program.

Finally, the tax credit has also been extended for one year for any military member who has been deployed outside of the U.S. for at least 90 days at any time from January 1, 2009 to May 1, 2010.

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There is a deadline for qualifying for the tax credit. Buyers have to have a signed contract on the home they are purchasing no later than April 30, 2010 and the purchase has to be completed no later than June 30, 2010, unless they qualify for the military exemption.

So, if you have been considering buying a first home or moving up (or down) into another home, now is the time to act! It currently takes underwriters about 30-45 days to process mortgage applications.  Add a few weeks time to that to search for the home you want to buy and write the offer.

Want more information?  Here is a link to a press release from the Internal Revenue Service website.

Check out this brochure from the National Association of REALTORS®.