Real-Estate Stimulus: Home Buyer Tax Credits
As part of the United States governments effort to stimulate the real-estate market, it extended its Home Buyer tax credits. It is no longer just available for first time home buyers, but to existing home owners. First time homebuyers can be entitled to as much as $8,000 and existing homeowners to $6,500 tax credits.
In accordance to the Worker, Homeownership and Business Assistance Act of 2009, home buyer tax credits can cover sales made on or before January 1, 2009 until April 30, 2010. If you are in a binding contract, then it should be signed before April 30, 2010. You would need to settle the property acquisition before June 30, 2010.
This laws qualifications for a first time home-owner are not that stringent. To qualify for the $8,000 tax credit, a “first” time home buyer is somebody who has not owned a house or residence for three years prior to the newly acquisitioned property.
But if you are married and your spouse had owned a house in the last three years before your existing home, then both of you do not qualify for the credit. If you have bought a non-principal residence like a vacation house or a property which is being rented, then you still qualify for the first-time home buyer credit.
Aside from the first-time homebuyer credit, the repeat home buyer or also referred to as the long-time residents could get tax credits. A person could qualify as a repeat home-buyer if he or she has owned and resided in the same residence for the last five consecutive years within the eight years before the date or purchase. Married couples could apply for the repeat homebuyers credit as long as they have five years of principal residence for each spouse.
For first-time home buyers, the homes purchase price is multiplied with 10%. They could get $8,000 as the maximum value for the tax credit. The same percentage is applicable to repeat home buyers, they could a maximum tax credit of $6,500. But if the property acquired by the repeat home buyers is more than $800,000, then they may not qualify for the credit.
Any kind of home, as long as it was used as the principal residence is covered by the tax credit. It could be houseboats, townhouses or condominiums or those mobile homes. However, this does not cover houses purchased from family members like parents, children, grandchildren or from in-laws.
To apply for tax credit, home owners should complete IRS forms. This would enable IRS determine how much is their tax credit. To clarify, this credit does not apply on future purchase. It can only be used for a completed and settled purchase. You could ask the IRS or the state tax department if you would pass the home buyer tests that would determine your eligibility for the credit.
With this effort, hopefully, the housing market will be given its much-needed push. With the deadline just a few months away, taking advantage of such benefit should be taken into consideration by home buyers.
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