There’s great news for people considering buying a home! Congress has recently passed new legislation, as a portion of the strategy for energizing the U.S. housing market, that makes the Federal tax credit of up to $8,000 now available to many more first-time home buyers. Additionally, selected individuals who now own a home and want to buy a new one will also be eligible for a Federal tax credit of up to $6,500.
The Extended Home Buyer Tax Credit extends and improves the existing law which expires on Nov. 30th. Both new and move-up buyers can now get the benefits of the new tax credit. Needless to say, this is in addition to the current historically low mortgage interest rates.
Here are the new key provisions:
* The first-time buyers’ $8,000 has now been extended through the end of April, 2010. * Individuals who currently own a home are now eligible for the $6,500 tax credit, if they have lived in the house they are selling as their principal residence for five consecutive years within the last eight years. * Income limits for eligible home buyers were increased to a range of $75,000 to $125,000 (for single buyers) and a range of $150,000 to $225,000 for couples. * Time has been added to allow for closing the home purchase transaction. On condition that they have a ratified contract by the 30th of April, they will then have until June 30th, 2010, to finalize the purchase. * In order to qualify, the purchase price of the residence must be no more than $800,000.
The program works as follows:
* Tax credits provide a dollar-for-dollar payment of taxes owed with any surplus funds available as a refund. The amount of the tax credit will be first credited toward any tax liability for the year of purchase. Next the amount remaining will be refunded to the buyer. (For example a first-time buyer who owes $2000 in taxes would receive a check for $6,000). * Any single-family home purchased to be used as a primary residence (including condominiums, co-ops) will qualify if it is purchased by April 30th, 2010 and closed by June 30, 2010. * The entire amount of the credit is available for individuals with an adjusted gross income of no more than $125,000 or $225,000 on a joint return. Above those incomes, the amount of the tax credit is reduced until the upper limit is reached – $145,000 for an individual or $245,000 of joint income.
Jim Navary has been a freelance writer and researcher for more thirty years covering a broad range of subjects. He is also a licensed real estate agent in the Commonwealth of Virginia specializing in real estate in the Tri-Cities area of Virginia and, in particular, Colonial Heights, Virginia, area homes for sale.
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