There is wonderful news for people thinking about buying a home! Congress has recently voted for further legislation, as a portion of the plan for stimulating the U.S. real estate market, that makes the Federal tax credit of up to $8,000 now available to even more first-time buyers. In addition, certain people who presently own a home and would like to buy a new one will also be able to obtain a Federal tax credit totaling up to $6,500.
The Extended Home Buyer Tax Credit extends and enhances the current legislation that expires on Nov. 30. Both new and move-up buyers may now benefit from the Federal tax credit. Of course, this is in addition to today’s historically low mortgage interest rates.
Here are the new key provisions:
* The first-time buyers’ $8,000 has now been extended through the 30th of April, 2010. * Current homeowners are now eligible for the $6,500 tax credit, provided they have resided in the house they are selling as their principal residence for five straight years within the past eight years. * Income limits for qualifying 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 extended to allow for closing the home purchase. If they have a binding contract by April 30th, they will subsequently have until June 30, 2010, to finalize the transaction. The qualifying purchase price of the new home must be $800,000 or less.
Here’s how it works:
* Tax credits grant a dollar-for-dollar payment of taxes owed with any surplus funds available as a refund. The amount of the credit will be first credited toward any tax liability for the year of purchase. Then the remainder 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 residence purchased to be used as a primary residence (including condos, co-ops) will qualify assuming that it is purchased by the last day of April, 2010 and closed by the 30th of June, 2010. * The full amount of the tax credit is available for individuals with an adjusted gross income of no more than $125,000 or $225,000 on a joint return. When income is greater than these figures, the amount of the tax credit is reduced until the maximum limit is reached – $145,000 for individuals or $245,000 of joint income.
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