Tax Credit Info From Our Friends At The Peterson Lending Team

Tax Credit for First-Time and Repeat Homebuyers

The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends the first-time homebuyer tax credit and expands the credit to repeat home buyers and here’s what you need to know.

The new law states that “an eligible taxpayer must purchase, or enter into a binding contract to purchase, a principal residence and close escrow on or before April 30, 2010.” However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax return. If the home was purchased between January 1, 2009 and November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing joint tax returns. If the home was purchased between November 7, 2009 and April 30, 2010, the income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns (an increase of $50,000 for single taxpayers and $75,000 for married couples).

The tax credit for first-time home buyers (the IRS defines a first-time home buyer as someone who has not owned a principal residence the past three years prior to the purchase) is equal to 10 percent of the purchase price (up to a maximum of $8,000 as the tax credit applies only to homes priced at $800,000 or less). The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.

The credit is also valid for current homeowners buying a replacement principal residence. Eligibility to claim the tax credit states that the buyers must have owned and lived in their previous home for five consecutive years out of the previous eight years. The tax credit is equal to 10 percent of the purchase price (up to a maximum of $6,500 and the tax credit applies only to homes priced at $800,000 or less). The credit is available if the home was purchased between November 7, 2009 and April 30, 2010. However, the tax credit will qualify if a binding purchase contract is signed by April 30, 2010 and escrow closes by June 30, 2010. The income limits are $125,000 for single taxpayers and $225,000 for married couples filing joint tax returns. The tax credit doesn’t have to be repaid unless the home is sold or no longer used as the buyer’s principle residence within three years after the purchase.
If you haven’t yet explored how the tax credit and the current rate environment might benefit you or someone you know, let’s arrange a time to discuss your unique situation as well as your short- and long-term goals. Remember, rates are still very good, but they may not be for long.

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Carol Peterson
Home Loan Consultant
100 E Street, #201
Santa Rosa, CA 95404
Cell: (707) 290-5167
Toll Free: (866) 627-4701
carol@petersonlending.com
www.carolpeterson4loans.com