Tax Credit - NOT Just for First-Timers

The deadline of April 30 is fast approaching for the homebuyer’s tax credit. Even current homeowners can receive up to $6,500 and first-timers up to $8,000.

The popular income tax credit was set to expire last November, but it was extended and expanded to include long-time homeowners. Under the new law, eligible taxpayers must buy or enter into a binding contract to purchase a principal residence by April 30, 2010 and close by June 30, 2010.

Details:

• April 30, 2010: Deadline to purchase or go under contract on a home.
• June 30, 2010: Deadline to close on the purchase
• Current homeowners can qualify for up to $6,500 if they have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new primary residence.
• The new law raises the income limits for people who purchase homes after Nov. 6, 2009. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers.
• Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit.
• For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.
• The maximum credit amount remains at $8,000 for a first-time homebuyer – that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.

For purchases that occur after Nov. 6, 2010, several new restrictions go into effect:

• Dependents are not eligible to claim the credit.
• No credit is available if the purchase price of a home is more than $800,000.
• A purchaser must be at least 18 years of age on the date of purchase.

For Members of the Military:

• Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

There is still time to take advantage of this historic tax credit. Please call me at 303-815-2926 so we can start your home search now in Boulder, Colorado.

News release 2009-108 has the details, as do two new IRS videos in English and Spanish.