Extended Tax Credit - What It Means This Time

By
Real Estate Agent with Baird & Warner Real Estate

The original tax credit was targeted for first-time home buyers and expired at the end of November.  However, the government revised the plan and expanded it to include all buyers of primary homes. Along with the current buyer's market that we are experiencing, this is an added bonus to most homebuyers.

Here's how it works:

Who Can Take Advantage of This?                                                       Federal Tax Credit

All first-time buyers (designated as not having owned a home in the past three years) and current homeowners who have have lived in their home for five consecutive years during the past eight years before they purchase the new home.

When Does the Tax Credit Expire?

Previously, one must have closed on their purchase by the deadline.  This time, a contract must be signed by April 30, 2010 and the closing must occur by June 30, 2010.

How Much is the Credit?

It's different depending on your status.  If you are a first-time home buyer, then the credit is 10% of the cost of the home up to $8000.  If  you are a current homeowner, the credit is also 10% of the purchase price but only up to $6500. 

Does Income Make a Difference?

The income requirements were raised this time around.  If you are an individual, you must make less than between $125,000-$145,000 or between $225,000 and $245,000 for joint filers.

Can Any Type of Property Be Bought?

The residence that you buy must be your primary home - it can be a single family home, a condo, co-op, mobile home, etc, but it cannot be a vacation home.   It can even be a houseboat as long as it is not your primary residence.

Is There a Limitation on Price?

The purchase price of the home cannot exceed $800,000.

Do I Get My Money Back at Closing?

No the tax credit is reclaimed when you file either your 2009 or 2010 income tax form.  There is a special IRS form for this, Form 5405.

Is This a Loan?

The credit does not have to be repaid as long as you stay in your new home for at least three years.  If you have to sell before that time, the credit must be paid back in full.

This credit will not work for everybody, particularly here in the North Shore suburbs of Winnetka, Wilmette, Kenilworth and Glencoe where most income is higher than the minimum required to receive the credit.  But if you make the cut, then this could mean a little extra money in your pocket.

Posted by

Margaret Goss - Winnetka & North Shore Real Estate Broker
Specializing in homes for sale in Winnetka, Wilmette, Kenilworth, Northfield, Glencoe, Glenview, Northbrook & Evanston.

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Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Lenn Harley 12/18/2009 02:49 PM
  2. Barbara Martino-Sliva 12/18/2009 04:42 PM
  3. Michelle Gibson 12/20/2009 12:30 PM
  4. Monique Hailer & Todd Combs, PA 12/26/2009 09:44 PM
Topic:
Lending / Financial
Groups:
Realtors®
Tags:
new tax credit
home purchase
homebuyers tax credit
winnetka
wilmette
glencoe
kenilworth

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Rainmaker
760,566
Claude Cross
Homes By Cross, Inc. - Charlotte, NC
Charlotte NC Homes For Sale

Nice synopsis. Gonna Use (steal) This (if you don't mind) and give it to my buyers as a quick reference :) Great post. Thanks

Dec 18, 2009 02:55 PM #1
Rainmaker
466,590
Jeff&Grace Safrin
F.C.Tucker 1st Team Real Estate - Valparaiso, IN
SpousesSellingHousesTM

Very concise Margaret - great post for us all.... You should go to work for the fed gov and write bills :) Happy Holidays.

Sincerely,

Grace

Dec 21, 2009 03:32 PM #2
Rainmaker
1,189,241
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566

I like your Reader's Digest version of the basics. Houseboats, wow! Thanks for the summary!

Dec 26, 2009 11:57 PM #3
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Rainmaker
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Margaret Goss

Chicago's North Shore & Winnetka Real Estate
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