By Jessica Sadler
As you probably know, Congress has passed legislation expanding and extending the home buyer tax credit into 2010. This credit allows for many first time homebuyers to receive an $8000 credit on their 2009/2010 taxes. It also offers a credit to those “trading up” if they have been in their current home for 5 or more years. It can be a little complicated so I’ve listed the details below.
There are essentially two credits but they have some of the same qualifications. Both are described and the general eligibility requirements are listed below.
1. First Time Home Buyers:
The purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Maximum credit: $8,000.
2. Current Home Owners:
Current home owners who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
Maximum credit: $6,500.
Eligibility:
- Effective 11/7/2009
- Written binding contract to purchase by April 30, 2010
- Close by July 1, 2010
- May be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
- Homes purchased for $800,000 or less.
- Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
- The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit.
- The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
See http://www.irs.gov/newsroom/article/0,,id=204671,00.html for more information.