Q & A on Extended Home Buyer Tax Credit

Q & A on Extended Home Buyer Tax Credit

Which Properties are eligible?

The Extended Home Buyer Credit may be applied to primary residences, including: single-family homes, condos, and town homes.

How much is available?

The maximum allowable credit for first-time homebuyers is $8,000. The maximum allowable credit for current homeowners buying their next home is $6,500.

How is a buyer's credit amount determined?

Each homebuyer's tax credit is determined by two additional factors:

The price of the home and the buyer's income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 6, 2009, single buyers with incomes up to $1235,000 and married couples with incomes up to $225,000 may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits.

If the buyer's income exceeds these limits, can they still get a credit?

Yes, some buyers may still be eligible for the credit. The credit decreases for buyer who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as the buyer's income approaches the maximum limit. Home buyers earning more than the maximum qualifying income - over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a buyer still qualify if the closing is after April 30, 20010?

Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1 2010, to close.

Will the tax credit need to be repaid?

No. The buyer does not need to repay the tax credit, if the buyer occupies the home for three years or more. However, if the property is sold during the three-year period, the full amount credit will be recouped on the sale.