Federal Tax Credit to Buyers About to Expire
By · April 27, 2010
Remember that Tax Credit that I wrote about back in December fo 2009? Well, it is about to expire at the end of this month - April 30, 2010.
In order to qualify you must be in a valid sales contract and be in escrow on or before April 30, 2010 and close escrow by June 30, 2010.
So, if you are thinking about writing an offer on that property you saw recently and it is something you could see yourself living in, now may be the time to go forward. Remember, this is not only for first-time buyers but also for a repeat buyer who will live in the property. However, repeat buyers only receive $6,500 instead of the $8,000 for first-time buyers.
The tax credit will be in the amount of 10% of the purchase price of the new home, not to exceed $8,000 for first time buyers (or $6500 for repeat buyers) and the home can't cost more than $800,000. There are income limits of $125,000 for single tax payers and $225,000 for married tax payers filing jointly (for sales occurring after November 6, 2009). For unmarried joint purchasers, the IRS allows the tax credit to be allocated to any purchaser that qualifies as a first-time home buyer.
The government has added a new tax credit of up to $6,500 for repeat buyers. In order to qualify for the repeat buyer tax credit of $6,500, these buyers must have owned and used a prior residence as a principal residence for any five consecutive years in the 8-year period before the date of the purchase of the new principal residence.
Now, what is a tax credit? A tax credit reduces your income tax bill on a dollar for dollar basis. This credit can be claimed on your 2009 tax return, due April 15, 2010. However, if your tax bill is less than the tax credit, you will still receive the money in the form of a check. All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check. Remember though, you will receive this refund from the IRS after you purchase your new home, so you cannot use the funds to help with your down payment.
For further information, please talk with your tax accountant or go to the IRS website at:
However, this tax credit is expiring soon – so get into a valid contract and escrow must be opened in order to qualify by April 30 and close escrow by June 30, 2010.