Home Buyer’s Tax Credit Extended and Expanded: It’s Official!

Home Buyer’s Tax Credit Extended and Expanded:  It’s Official!

The Homeowner's Tax Credit - A Tiny Bailout

I just received an email explaining all of the details on the Homebuyer’s Tax Credit, which has been extended and expanded to current homeowners.

According to Me, this is good news for current homeowners, who were previously left out of this tax credit.  Perhaps this will encourage the middle part of the housing market to start moving!  This is also good news for first time homebuyers, as they now have another five months to seal the deal on their first home (that is, if they can actually get approved for a mortgage and are disciplined enough to save). 

For our economy, though, this seems like bad news.  Where exactly are we getting all of this money from?  Oh, wait, it’s from people like me.  And if I have any children, this money will come from them also.  Why is the Government Setting Such Steep Regulations on the Tax Credit?

And another gripe I have:  If the government really wants to try to help out the American people and not just the banks, then why such steep regulations on who and how one can receive this money?  For example, you have to make less than $125K (if you’re single/less than $225K if you’re married), you must have lived in your primary residence for 5+ years, and you can’t buy a house for more than $800K.  Oh, and there are SEVEN more stipulations concerning the home itself.  I just don’t get it.

The following is an email report from Tonya Esquibel, a mortgage broker here in Nashville that I like working with.  The following email report came with instructions to “Copy and Paste as You Wish”.  So here goes:

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to  $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

As always, if you have any questions about your specific situation or would like to discuss how you may benefit from this program, please call or email me. I’ll be happy to sit down with you.

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If you are interested in finding a home in Green Hills, Downtown, 12th South, or Oak Hill area of Nashville, or would like to look at other real estate for sale in the Middle Tennessee area, please search the MLS HERE.  Please note:  You will have to register with my site to be able to search the MLS.  I will contact you initially and all requests thereafter for privacy will be respected.

Looking to move?  Wanting to Invest?  Need help as a First Time Buyer?  Please feel free to call me, Emily Lowe (yes, I’m a Realtor, with The Lipman Group Sotheby’s International Realty) at 615.509.1753