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Are You Eligible for a Homebuyer's Tax Credit?
Last year, an $8,000 credit for first-time homebuyers helped spur the housing market and put more money into new homebuyers' pockets. The credit, which was previously set to expire at the end of November, has been extended through April 30, 2010.* You now have until June 30, 2010, to close on the property as long as you have a signed purchase agreement by April 30.
In addition, income limits have been raised (see below), so many more people are eligible for the credit. Even better, this is a refundable credit, which means you will receive the full amount of the credit for which you are eligible, even if you owe less in taxes than the credit amount.
A Break for Repeat Homebuyers, Too
The new rules also allow eligible homeowners who have owned and lived in a home for five out of the past eight years to receive a $6,500 tax credit when purchasing a new primary residence. This is a one-time opportunity for current homeowners who'd like to move up to a larger home, or for empty-nesters who are ready to downsize.
Here are the major criteria:
- For first-time homebuyers, the tax credit is up to $8,000 (or 10% of the purchase price, whichever is less). You must not have owned a home for at least three years prior to the purchase of the new home.
- For repeat homebuyers, the tax credit is up to $6,500, or 10% of the purchase price, whichever is less. You must have owned and lived in a home for five out of the past eight years.
- Maximum purchase price of the home is $800,000.
- Income eligibility limits apply: a modified adjusted gross income (MAGI) below $125,000 for an individual or $225,000 for a married couple filing jointly.
- You must use the home as your principal residence and live in the home for at least three years after the purchase date.
- You must sign the purchase agreement by April 30, 2010, and close before July 1, 2010.
Other restrictions apply. You can find more information at www.federalhousingtaxcredit.com.
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*For active-duty service members working overseas, the credit is extended through April 30, 2011.
Thrivent Financial Bank is a Member FDIC and Equal Housing Lender.