Hooray! Last week, Congress passed and Obama signed the new Homebuyer Tax Credit into Law. Not only is it an extension of the $8000 first-time homebuyer tax credit, but it also adds a $6500 tax credit for repeat/move-up homebuyers.
This new version of the tax credit is part of The Worker, Homeownership, and Business Assistance Act of 2009, and extends the credits through purchase contracts dated April 30, 2010 or prior; however, the transactions must close by June 30, 2010.
Here’s a quick summary of the new version of the tax credit:
$8000 First Time Homebuyer Tax Credit:
- First of all, let’s define a First Time Homebuyer – someone who has not owned a principal residence in the three years prior to the qualifying purchase. This is important…for married couples or multiple parties involved in the transaction, all parties must be a first-time homebuyer. These restrictions are unchanged from the previous version of the bill.
- The tax credit is only available for purchases of $800,000 or less…I know, that’s pretty restrictive…aren’t most first time homebuyers looking in the $1-$2Million range???
- For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly (the previous income restrictions).
- This is new! – For homes purchased after November 6, 2009 and on or before April 30, 2010 (closed by June 30, 2010), single taxpayers can have incomes up to $125,000 and married couples are allowed up to $225,000 to qualify for the full tax credit.
$6500 Move Up/Repeat Homebuyer Tax Credit (this is all new stuff!):
- Now, let’s define an eligible ?move up’ or ?repeat’ Homebuyer – The homebuyer(s) must have owned and lived in their previous home for five consecutive years out of the last eight years.
- The tax credit is only available for purchases of $800,000 or less…I know, here in Hawaii, this may actually be somewhat restrictive for repeat buyers.
- Again, single taxpayers can have incomes up to $125,000 and married couples are allowed up to $225,000 to qualify for the full tax credit.
Lastly, and possibly, most incredibly, your tax credit can be purchased from you so that you don’t have to wait for your credit. The cash from the sale of the credit can be used to you cover closing costs or be used as a down payment. I don’t know of any entities doing this yet, but if someone claims to be doing so, they may not be crazy.
So, rejoice quickly, there’s not much time to waste. You now have about six more months to find and put an offer on your dream home. Get crackin’