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Home buyer’s tax credit extended to April 2010!!

Submitted by on November 9, 2009 – 1:12 PMNo Comment

funston ext5I know many of my buyers will be happy with this news, official as of Friday.  Income limits were also increased for individual and joint buyers along with the extension running to April 2010.

For those of you not based in the Bay Area, an individual making $125K/year may seem like a lot of money but it really doesn’t go far in our expensive S.F. Bay Area communities especially when one is a single purchaser and trying to squeeze into a home or condo.

There is also a new incentive of $6500 for move-up or trade down buyers.

In S.F. & other nearby markets like San Mateo County, we have a combination of price softening, incredibly low interest rates and tax credits all of which is allowing several of my clients (& buyers in general) who had been priced out of the market to get into a property.

Here is the National Association of Home Builders site with lots of information on the credit as well as links to Facebook & Twitter for updates.

Here’s the run down from SF GATE:

Home-buyer tax credit: The bill extends the federal tax credit for so-called first-time home buyers, which was set to expire Nov. 30. This credit remains at 10 percent of the purchase price up to a maximum credit of $8,000. To qualify, you must buy the home as your principal residence and not have owned a home in the previous three years.

It also creates a new credit for people who already own a home and purchase a new one to live in. The credit for repeat buyers is 10 percent of the purchase price, with a maximum credit of $6,500. To qualify, you must have owned and lived in a home as your primary residence for five consecutive years at any time during the eight years before the replacement home is purchased. It’s designed for move-up buyers who want a bigger house as well as empty nesters looking to downsize.

These rules apply to both credits, for first-time and repeat buyers.

— You must live in the newly purchased home for at least 36 months or you will have to repay the entire credit, with certain exceptions for military personnel or people who die.

— You must sign a binding contract to purchase the home by April 30, 2010, and close by June 30.

— You may buy a new or existing home.

— For homes purchased after Friday, Nov. 6, the price cannot exceed $800,000. Under the old law, there was no price limit. Date of purchase is the date title changes hands.

— New, higher income limits apply to homes purchased after Friday, Nov. 6.

Previously, the first-time home buyer credit phased out for singles with modified adjusted gross income between $75,000 and $95,000 and for married couples filing joint returns with income between $150,000 and $170,000.

The new limits, which apply to both first-time and repeat buyers who purchase after Nov. 6, are $125,000 to $145,000 for singles and $225,000 to $245,000 for joint filers.

For example, a single, first-time home buyer earning $115,000 would get no tax credit if he bought a home in February, but would be eligible if he bought a home in December, assuming all other requirements are met, says John Roth, senior tax analyst with tax information firm CCH.

The new law gives the Internal Revenue Services tools to cut down on fraud in the program and also requires people who claim the credit to attach a copy of their settlement statement with their tax return.

So people can get their tax credit in a hurry, the new law lets people who buy a home in 2009 or before the 2010 deadline treat it as though they bought it on Dec. 31 of the previous year. Say you buy a home on Jan. 31, 2010. If you treat it as though you bought it on Dec. 31, 2009, you can accelerate the credit by claiming it on your 2009 return filed in 2010. Otherwise, you will have to wait until you file your 2010 return in 2011, according to CCH.

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