Are you sorry you missed the first-time homebuyer tax credit?     Happy days are here a little longer, at least if you plan to buy or sell real estate.     Buyers and sellers, breathe.   Thanks to President Obama’s extension of the first-time homebuyer’s tax credit, not only buyers and sellers, but realtors, bankers, appraisers, home inspectors, home stagers, contractors, and other stakeholders have reason to get excited.

It’s not just first-time buyers who get to have all the fun this time around with an $8000 tax credit.     Next-time buyers, you get a bonus, too.     President Obama has expanded the tax credit to buyers who want to upgrade.   So, if you’ve lived in your current residence for at least five years, you may be eligible for a $6500 tax credit.

Are you eligible?    Here’s the fine print:

Principal residence

For the $8000 tax credit, to be considered a first-time homebuyer by law means you have NOT owned a principal residence in the three years before the purchase.   So, let’s say you sold a home 10 years ago and have rented during that time.   Enough time has pass to make you a first-time homebuyer, despite your feelings of déjà vu.

What if you currently own a home and want to upgrade?     You must have lived in your home-your principal residence-for five consecutive years of the past eight years.   The home you purchase must also be your principal residence.   So, let’s say you have owned your property for eight years but rented it out for two years.   Then, you decided to move back in during the last three years.   Unfortunately, you would not qualify in that scenario.

All tax-filing United States citizens are eligible for the credit.

Income limits

Are you a single or head of household taxpayer?     Is youR modified adjusted gross income (MAGI) less than $125,000?     You’d quality for both programs based on income.

For you married couples, the combined income on your joint return can’t exceed $225,000 to qualify.

Is your income higher than the above?   Don’t stop reading:   You could still qualify for a partial credit.   The specifics?

For you single or head of household taxpayers, your can earn between $125,000 and $145,000 for a partial credit.

For you couples, your income limits are between $225,000 and $245,000 to receive partial credit.

So, singles, you can’t earn more than $145,000.   Couples, you can’t exceed $245,000.

The deadlines:   Make much of time

This is an extension of the homebuyer tax credit, so you can relax a bit, but don’t become lax. You could miss out.   Be mindful of the tax credit’s eligibility period.

The credit is effective for homes bought after November 6, 2009 and before May 1, 2010.    However, if you sign a contact to buy on April 30, 2010, you will qualify for the tax credit as long as you close the deal before July 1, 2010.

What types of home qualify?

  • Homes with purchase price of less than $800,000
  • Newly constructed or resale homes
  • Single family detach
  • Townhomes/condominiums

What types of home don’t qualify?

  • Vacation homes
  • Rental property

The tax credit is refundable

Let’s say you qualify and get the tax credit.   If you owe income taxes that are less than the credit for which you qualify, you will receive a check from the government for the difference.

For example:

You qualify for the $6500 next-time buyer credit.   You owe $4000 in federal income taxes.   You’ll not only pay no taxes, but would receive a check for $2500 from Uncle Sam.

Want more details about President Obama’s exciting tax credit?   Contact me.

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