Posts Tagged ‘expensive home’
The Home Buyers Tax Credit Extension Could Benefit Many
2009 First Time Home Buyers Tax Credit
Most people are now well aware of the First Time Home Buyer Tax Credit issued in 2009. The National Association of Realtors (NAR) statistics indicated a consistent rise in pending home sales during the period in which first time home buyers could reap tax credits. NAR’s statistics showed pending home sales were, in fact, up.8% during October, 2009 when compared with October, 2008.
Representative Jim McDermott (D) from Washington State said, “The homebuyer’s credit has helped pave the way for stabilization in the housing market…. Its extension will continue to make homeownership more affordable and bring confidence to a housing market and economy that remain fragile.” There weren’t any tax credits for people who already own a home, or had owned a home within the last 5 years in the legislation. There was much grumbling on the part of homeowners who failed to qualify for tax credits under this program.
2010 Extended Home Buyers Tax Credit
On November 8, 2009, President Obama signed into law an extended version of the tax credit legislation as part of a larger economic stimulus package. The tax credit for qualified buyers who upgrade to newer or more expensive residences between November 7th, 2009, and April 30th, 2010, could qualify for up to $ 6,500 in tax credits. The benefits of the first time home buyer credit remained capped at $ 8,000.
Charles McMillan, President of the National Association of Realtors, states, “The substantial rise in home sales we’ve seen over the past few months proves that the tax credit is working and is being used by buyers who were waiting for the right opportunity to get into the market. This important incentive is helping to stabilize the housing market, stimulate the economy and create new jobs in communities all across our great nation. Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership.”
Buyer Qualification for the Tax Credit Extension
Each qualifying home buyer who has not owned their own residence, nor has their spouse owned a residence, during the three years prior to buying a qualifying home during the period beginning November 7, 2009 and ending April 30, 2010 will receive a tax credit of $ 8,000. Qualifying homebuyers that purchase homes during the same period AND have owned the home being sold or left as their primary residence for five years consecutively of the past 8 will qualify for up to $ 6,500 credited off. The qualifying home must be in the binding contract phase of purchase no later than April 30, 2010 in order to qualify for the tax benefit. A copy of the HUD-1 Settlement Statement must be provided after closure of the sale; closing must occur no later than June 30, 2010. Obviously, you won’t be qualifying if you’re under 18.
Income Qualifications
Homebuyers who are not married must have income of less than $ 125,000 to qualify for the full tax credit. Married homebuyers must have combined incomes less than $ 225,000 to qualify fully. Single homebuyers earning between $ 125,000 and $ 145,000, or married couples filing joint income tax returns indicating income of between $ 225,000 and $ 245,000, will qualify for a portion of the tax credit. The amount of the tax credit is on a sliding scale, so the more you earn over the maximum, the less tax credit is available to you.
Tax Credits Versus Tax Deductions
The greatest part of this tax credit program is that it offers a CREDIT as opposed to a DEDUCTION. A tax deduction means that your taxable income is reduced by a specific amount. That said, a tax credit means the credit is the tax is assessed at the end, and subtracted from what’s owed, or added to refunds due. This maximizes benefits for people who take advantage of the 2010 Extended Home Buyers Tax Credit Program.