Tax Credit for Buyers and Sellers!

Congress and President Obama passed both an extension of the $8,000 First Time Homebuyer Tax Credit and added a $6,500 Homebuyer Credit for sellers who have lived in their home for 5 consecutive years in the past 8 years.

The offer must be completed and finally signed by April 30th, 2010. The closing must be before June 1, 2010.

Some common questions:
Must a homeowner sell their current home to receive the tax credit?
NO

Can they rent their previous home and purchase another home and get the credit?
YES - as long as the replacement/new home is going to be their primary home.

Can it be used to buy investment property/second home/cabin? NO - it must be a replacement primary residence.

If a homeowner bought less than four years ago, but owned prior to that, would they qualify?
NO - They must have lived in the same (key word being "same") principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

Are there income limits?
YES. $125,000 for a single person and $225,000 for a married person.

Are there any other requirements for the tax credit?
YES. If you are buying you must not have owned a home for 3 years. if you are selling it must be your primary residence for at least 5 of the last 8 years.

Is there a max amount I can buy a home for?
YES. $825,000

Is there a lowest amount I can buy a home for?
Yes, the $8,000 is on a sliding scale equal to 10% of the sales price UP TO $8,000.oo For example, if the home you purchase is only $70,000 then you will only receive $7,000 worth tax credit.

Does the tax credit have to be repaid?
No. 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 the three-year period, the credit will be recouped on the sale.

If I have any questions, who should I ask?
YOUR TAX PREPARER/ACCOUNTANT. The tax credit is exactly that, a tax credit. You must discuss everything with you accountant prior to purchasing/selling a home to ensure you are completely eligible.
Posted by Rebecca at 2:29 PM