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BREAKING NEWS!
OCTOBER 28, 2009
TAX CREDIT EXTENDED THROUGH THE END OF APRIL 2010
WASHINGTON - Senators agreed
Wednesday to extend a popular tax
credit
for first-time homebuyers and to offer a reduced credit to some
repeat buyers.
The tax credit provides up to $8,000
to first-time homebuyers but is set to expire at the end of
November.
Senators agreed to extend the
existing tax credit for first-time homebuyers while offering a
reduced credit of up to $6,500 to repeat buyers who have owned their
current homes for at least five years, said Regan Lachapelle, a
spokeswoman for Senate Majority Leader Harry Reid, D-Nev.
The tax credits would be available to
homebuyers who sign
sales
agreements by the end of April. They would have until the end of
June to close on their new homes, said a congressional aide, who
spoke on condition of anonymity because he was not authorized to
publicly discuss the deal.
Senators were still negotiating the
expansion of a separate tax credit that lets money-losing
businesses
get refunds for taxes paid in previous years, providing them with an
immediate source of cash.
Senators in both political parties
were hoping to add both tax provisions to a bill that would give
people running out of unemployment
insurance
benefits up to 20 more weeks of federal aid. The Senate could vote
on the overall bill as early as Thursday, but lawmakers were still
haggling over several unrelated amendments Wednesday evening.
2009-2010 HOME BUYER
FEDERAL TAX CREDIT
FACT SHEET
Who is Eligible
First-time home buyers, who
are defined by the law as buyers who have not owned a principal
residence during the three-year period prior to the purchase, may
be eligible for up to an $8,000 tax credit.
Existing home owners who have
been residing in their principal residence for five consecutive
years out of the last eight and are purchasing a home to be their
principal residence (“repeat buyer”), may be eligible for up to a
$6,500 tax credit.
All U.S. citizens who file
taxes are eligible to participate in the program.
Income Limits
Home buyers who file as
single or head-of-household taxpayers can claim the full credit
($8,000 for first-time buyers and $6,500 for repeat buyers) if
their modified adjusted gross income (MAGI) is less than $125,000.
For married couples filing a
joint return, the combined income limit is $225,000.
Single or head-of-household
taxpayers who earn between $125,000 and $145,000, and married
couples who earn between $225,000 and $245,000 are eligible to
receive a partial credit.
The credit is not available
for single taxpayers whose MAGI is greater than $145,000 and
married couples with a MAGI that exceeds $245,000.
Effective Dates
The eligibility period for
the tax credit is for homes purchased after Nov. 6, 2009, and
before May 1, 2010. However, home purchases subject to a binding
sales contract signed by April 30, 2010, will qualify for the tax
credit provided closing occurs prior to July 1, 2010.
Types of Homes that Qualify
All homes with a purchase price of
less than $800,000 qualify, including newly-constructed or resale,
and single-family detached, townhomes or condominiums, provided
that the home will be used as their principal residence. Vacation
home and rental property purchases do NOT qualify.
Tax Credit is Refundable
A refundable credit means that if
the amount of income taxes you owe is less than the credit amount
you qualify for, the government will send you a check for the
difference.
For example:
A first-time buyer who qualifies
for the full $8,000 credit who owes $5,000 in federal income
taxes would pay nothing to the IRS and receive a $3,000 payment
from the government. If you are due to receive a $1,000 refund,
you would receive $9,000 ($1,000 plus the $8,000 first-time home
buyer tax credit).
A repeat buyer who owes $5,000
would pay nothing to the IRS and receive $1,500 back from the
government. If you are due to get a $1,000 refund, you would get
$7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
All qualified home buyers can take
the tax credit on their 2009 or 2010 income tax return.
Payback Provisions
The tax credit is a true credit. It
doesnot have to be repaid unless thehome owner
sells or stops using the home as their principal residence within
three years after the purchase.
Thewww.federalhousingtaxcredit.com site
is being updated. Please check the site next week for more detailed
information on the new tax credit!
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