Understanding the home buyers tax credits

Because there seems to be alot of confusion regarding the extended 1st time home buyers tax credit along with the move up tax credit, I thought I would clarify some of the key points for both programs. It is important to note that I am not in the position to offer any tax advise or legal advise. Please consult with a real estate attorney, tax professional or loan officer to have all of your questions answered.

$8,000 First-time Home Buyer Tax Credit

 The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

 The tax credit does not have to be repaid.

 The tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000.

 The tax credit applies only to homes priced at $800,000 or less.

 The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

 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.

 For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.



The $6,500 Move-Up / Repeat Home Buyer Tax Credit

 To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.

 The tax credit does not have to be repaid.

 The tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500.

 The tax credit applies only to homes priced at $800,000 or less.

 The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

 Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

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