The Homebuyer Tax Credit Deadline Means Start Your Home Search Now
In November of 2009 the federal government approved the extension of the Homebuyer Tax Credit. This winter the home buying season starts early so first time buyers and long term, existing homeowners can take advantage of this opportunity before the April 30, 2010 deadline. If you understand the tax credit requirements, criteria and deadlines you can ensure a successful real estate transaction quickly and easily. In a buyer's market now is the time to find the real estate you've been dreaming of at prices you will find hard to beat in the future.
The Basics of the First-Time Homebuyer Credit
According to IRS.gov the following rules apply to all first-time homebuyers interested in receiving the tax credit based on The Worker, Homeownership and Business Assistance Act of 2009. (1)
-You must be an eligible taxpayer.
In order to qualify for the tax credit a home must be under contract by April 30, 2010.
-The real estate transaction must be closed by June 30, 2010.
If a homebuyer meets all of the requirements the tax credit can be as much as $8,000.
The Basics of the Existing Long Term Homeowner Tax Credit
If you have owned a home over the long term you also qualify for a tax credit. IRS.gov the following rules have been outlined for homeowners.
-You must purchase another primary residence.
-You must have lived in your current home for 5 consecutive years during the last 8 years. A Form 1098 Mortgage Interest Statement, homeowners insurance records and property tax records can be used to prove eligibility. (2)
-The tax credit can be up to $6,500.
-Contracts must be completed by April 30, 2010 and closing must be finished by June 30, 2010.
Additional Details Your Real Estate Agent Should Know
The reason homebuyers, especially those in the market of the first time, need an experienced real estate agent is so every detail about the transaction has been addressed. According to REALTOR.org there are some additional requirements for the tax credits some buyers may not be aware of.
First, if you are a first-time homebuyer you or your spouse must not have owned property in the last three years leading up to your purchase. (3) Second, the tax credit can be applied to single-family homes, condominiums, town homes and co-ops. (4) Third, the tax credit amount is determined by the price of the home and the buyer's income. Eligible homes must sell for under $800,000. Individual single buyers must make under $125,000 and married couples must make under $225,000 to qualify. If a homebuyer has a higher income they can still potentially qualify for below the minimum tax credit. (5)
In an article published by the Wall Street Journal, titled The Lowdown on Home-Buyer Tax Credits, writer Laura Saunders explains yet another reason to buy a home now and take advantage of the tax credit. "The credits offer dollar-for-dollar reductions of tax and are refundable. This means that a taxpayer who doesn't pay enough tax to offset the credit can get a refund," writes Saunders. "For example, if you qualify for an $8,000 credit but only owe $5,000 in tax, you [could] receive a $3,000 check from the Internal Revenue Service," she continues. (6)
As you can see the homebuyer tax credit combined with the current buyers market makes the winter and spring of 2010 an excellent time to being looking for the perfect property and first dream home. Follow the tax credit guidelines, plan ahead and work with a real estate expert and you will easily complete a smooth real estate transaction before the April 30 deadline. Don't wait for the summer to by a home; start now and take advantage of the added benefits the tax credit provides.