ITS OFFICIAL, $8,000 BUYER'S TAX CREDIT EXTENDED & EXPANDED

On Friday, 11/06/09, President Obama signed an extension and expansion of the first-time homebuyers tax credit. The $8,000 credit was scheduled to expire on 12/01/09, but will now be in effect through 06/30/10. Home buyers must sign a contract before 04/30/10 and close by 06/30/10.

Income limits were also raised: Single buyers can now earn up to $125,000 and still get the full credit while a married couple can earn $225,000.

MORE HOME OWNERS ARE NOW ELIGIBLE

a) FIRST TIME HOME BUYERS = $8,000

Those who have not owned a home in the past three years -- still qualify for an $8,000 rebate.

b) MOVE-UP BUYERS = $6,500

Those who have owned and occupied a residence for at least 5 years out of the past 8 can claim a $6,500 tax credit if they close on a purchase by the end 06/30/10. IMPORTANT, home buyers must sign a contract before 04/30/10 and close by 06/30/10.

WHO MAY QUALIFY?

Here are four scenarios illustrating how the tax credit rules for existing homebuyers will apply:

1. Scott owned a home in 2001 and 2002 but sold it to relocate for a job. He WOULD qualify for the $8,000 first-time-buyer credit because he has not owned a home in the past three years.

2. Sara purchased a home in 2004 and has lived there since. If she decides to buy a new home, she WOULD qualify for the $6,500 tax credit because she has lived in the same residence for 5 consecutive years in the past 8.

3. Janet purchased her home in 2002, lived there for 5 consecutive years before she rented it out in 2007. She WOULD qualify because she was an owner/occupier for at least 5 consecutive years in the past 8.

4. Mike purchased a home in 2006 and lived there for the past three years. He WOULD NOT qualify because he is neither a first-time homebuyer nor someone who lived in the same primary residence for 5 consecutive years out of the past 8.

DISCLAIMER. We are not licensed CPA or tax attorney, this article is intended for information sharing only. Should you have additional tax or legal questions, you are encouraged to contact your tax advisor or legal counsel for advice.

Source: www.recovery.gov; www.cnnfn.com