Senate votes to extend
US home tax credit
deadline
WASHINGTON
June 16 (Reuters) - The U.S. Senate
voted on Wednesday to give homebuyers another three months to settle on their
contracts and take advantage of a popular tax credit that sparked a rush of
activity in the housing
market.
The Senate, with a
vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that
extends the closing deadline to Sept. 30 for buyers who met the April 30
deadline to have a signed contract.
The current deadline
requires buyers to close by June 30 to get the $8,000 tax credit for first-time
homebuyers. Existing homeowners buying a new primary residence are eligible for
a $6,500 credit.
Reid offered the
measure as an amendment to a bill that would extend some popular business tax
breaks and extend unemployment insurance benefits for jobless
workers.
The
proposal would not have a significant impact on future home sales as the
extension would be only for home buyers who already had a contract in hand by
April 30.
The popularity of the
tax credit has caused some anxiety because settlement offices are inundated with
buyers trying to close on transactions by the end of this month to get the tax
break.
RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.
The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.
The following details apply to the homebuyer tax credit expansion:
Who is Eligible -First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence ("repeat buyer"), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.
Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.
Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.
Types of Homes that Qualify -All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.
Tax Credit is Refundable -A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.
Payback Provisions The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.
The
www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.
BUYING OR SELLING Whether Buying or Selling, call Edna Taylor 956-631-4902 to start your home search process in the McAllen, Texas area of the Rio Grande Valley. This applies to new homes and resale or existing homes for sale.
SELLERS This is the time to place your home on the market for move-up, downsize, or simply for newer homes. This allows the tax credit and the low interest rate to help you purchase your next home.
