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First-time Home Buyer Tax Credit Extended and Expanded

First-time Home Buyer Tax Credit Extended and Expanded

Yesterday the president signed a billed that extended the First-time Home Buyer Tax Credit. This bill also expanded the credit beyond just first-time buyers.

The big differences between the original tax credit and the new and improved version are that now current homeowners are eligible for a $6,500 tax credit, the income limits to qualify have been raised, and the new expiration date is April 30, 2010 but if one has a binding contract by the deadline they can still get the credit if they close the sale before July 1, 2010.

Below is a chart provided by the National Association of Realtors® comparing the original and the new versions of the tax credit.

FEATURE

Jan 1 - November 30, 2009 Rules as enacted February 2009

November 7 - April 30, 2010 Rules as enacted November 2009

First-time Buyer Amount of Credit

$8000 ($4000 married filing separate)

$8000 ($4000 married filing separate)

First-time Buyer Definition for Eligibility

May not have had an interest in a principal residence for 3 years prior to purchase

Same

Current Homeowner Amount of Credit

No Provision

$6500 ($3250 married filing separate)

Effective Date Current Owner

No Provision

November 7, 2009

Current Homeowner Definition for Eligibility

No Provision

Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years

Termination of Credit

Purchases after November 30, 2009. (Becomes April 30, 2010 on Date of Enactment.)

Purchases after April 30, 2010

Binding Contract Rule

None

So 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.

Income Limits (Note: Increased income limits are effective as of date of enactment of bill)

$75,000 - single, $150,000 - married, Additional $20,000 phase out

$125,000 - single, $225,000 - married, Additional $20,000 phase out

Limitation on Cost of Purchased Home

None

$800,000 November 7, 2009

Purchase by a Dependent

No Provision

Ineligible November 7, 2009

Anti-fraud Rule

None

Purchaser must attach documentation of purchase to tax return

How will this affect the Omaha real estate market? Was this tax credit a good idea? Stay tuned for my follow-up blog post.

UPDATE: Here is the follow-up to this post - The First-time Home Buyer Tax Credit, was it a Good Idea?

Posted Saturday Nov 07