Late in the last year there was much discussion about the 2009 First-Time Homebuyer Tax Credit, a new act passed by Congress which allowed significant financial benefits to those buying their first home. While these benefits were great, many existing home owners who were ready to downsize or relocate to another house felt left out of the equation. Not receiving as much media attention, but of advantageous news to those existing homeowners, an extension was passed to allow a greater number of people to take advantage of tax credits when buying new homes. Among this group were repeat buyers and those whose income was above the previous limitation of $75,000 a year (for individuals).
Revision Details
Perfect for Downsizing and Rightsizing
Whereas the original revision was limited to first-time buyers, the tax credit is now open to repeat buyers who have owned and lived in their home consecutively for 5 out of the last 8 years. The one restriction that remains in place to all buyers, regardless of new or repeat, is that the purchased home used for the tax credit must be a primary residence (as such, vacation homes are not applicable) and not exceed $800,000. This is great news, however, for those looking to downsize or resize their living style as we discussed last month.
Tax Credit Income
Limits Raised; More Able to Apply
The income limits have also been adjusted; the old limits were $75,000 in annual income for individuals and $150,000 for those who are married and filing jointly. The expanded limits are $125,000 for individuals and $225,000 for those who are married and filing jointly (married but filing separately must adhere to the $125,000 income limit). A new restriction in place requires that the homebuyer must attach documentation of their most recent tax return, a move designed to prevent fraudulent activity. The tax credit money must be repaid in full if the homebuyer does not end up using that home as their primary residence for the next three consecutive years.
Time is of the Essence
to Use the Tax Credit
Time is of the essence if you wish to take advantage of this tax credit revision for your new home, rather relocating or downsizing. To be effective, the purchase agreement must be signed by April 30, 2010 with a closing date no later than June 30, 2010. The strong buyer’s market has created a wealth of homes in the Greater Phoenix area within reasonable price ranges, making this opportunity even more attractive for swift action.
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