Tax Credits Expire April 30th… No Fooling.
Friday, March 19, 2010
We cannot emphasize enough the importance to seriously consider buying NOW if you think a home purchase is in your plans for 2010. The tax credits currently in place WILL NOT BE EXTENDED. AND, as interest rates and home values, rise, your ‘buying power’ will be diminished.
For the ‘once-in-a-lifetime’ tax credits for buying a home, April 30, 2010 is the deadline for being Under Contract
Question: How much is the credit?
Answer: Up to $8,000 for first time Buyers ($4,000 if married and filing separately), with a $75,000 income limit for a single person and $150,000 for a married couple. For a ‘repeat Buyer’ the credit is up to $6,500 ($3,250 if married and filing separately). Additionally, the income limit is $125,000 for a single person and $225,000 for a married couple. For both, there is a $20,000 ‘phase-out’. (Your actual Tax Credit, as long as income parameters are met can be calculated by taking 10% of the Purchase Price.)
Question: I am an existing homeowner and am looking to move soon. Must the home I buy cost more than the old home I will be selling?
Answer: No.
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home where the Seller will not agree to a price lower than $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago and have been renting since. If I buy now, will I be eligible for the $6500 tax credit if I meet the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2007 when they got a divorce. It would not matter if John has been renting since the divorce; he would be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is “consecutive”.
- Scott Askew
Posted in: Intown Atlanta Real Estate News