First-time home buyer federal tax credit

The first-time home buyer tax credit has been extended into 2010. According to the new legislation, first-time buyers must have a contract in place by April 30, 2010, and must settle by June 30, 2010.  Buyers who have not owned a home for three years may qualify as first-time buyers. The maximum credit is $8,000 and is determined on the basis of the sale price and buyer’s income. Income limits have been raised from the previous program: single filers may qualify for the credit with incomes up to $125,000, with the credit phasing out completely at $145,000. Joint filers with incomes up to $255,000 may qualify, with the credit phasing out completely at $245,000.  

Existing home buyer federal tax credit

New in this legislation is a maximum $6,500 credit for buyers who already own a home. To qualify, these buyers must have lived in their primary residence for 5 consecutive years during the last 8-year period.

Buyers who live in their new homes for at least three years will not need to repay the credit.

For more information, go to www.irs.gov or www.realtor.org.

SOURCE: National Association of Realtors, www.realtor.org.

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Highlights of the previous program

First-time home buyers who purchase a home between January 1, 2009, and December 1, 2009, that will be their principal residence are eligible for the first-time home buyer federal tax credit, according to the National Association of Realtors. For houses selling for $80,000 or more, the full credit is available, assuming buyers don’t exceed certain income limitations. For houses selling for less than $80,000, the credit allowable is 10% of the house’s cost.

Under this program, buyers purchasing their first home and buyers who haven’t had an ownership interest in a home for the past three years qualify as first-time home buyers. The tax credit is available to buyers with incomes up to $75,000 per year who file Form 1040 as Single and to married couples with joint incomes up to $150,000 per year who file jointly.  Above these amounts, the credit begins to phase out and is unavailable for single filers with incomes of $95,000 and above and joint filers with incomes of $170,000 and above.

The 2009 first-time home buyer tax credit does not have to be repaid. This differs from the 2008 first-time home buyer tax credit, which does have a repayment schedule.

If you qualify as a first-time home buyer and would like more information on purchasing a home, I would be happy to help!