IMPORTANT UPDATE (07/31/2010): The deadline for purchasing a new home for the purposes of qualifying for the first time home buyer tax credit expired on April 30th, 2010. HOWEVER, recent changes have extended the closing deadline (for those who were already in binding agreements by April 30th, 2010) to September 30th, 2010. The April 30th, 2010 date was the revised deadline after the previously set deadline of November 30th, 2009 was extended late last year. The closing deadline was just recently extended from the previous deadline of June 30th, 2010.
While the first time home buyer tax credit incentive has expired, exceptions apply to certain groups of people (such as government officials and members of the armed forces stationed overseas) who have until April 30th, 2011 to buy a home and until June 30th, 2011 to close. Details on whether you qualify for the tax credit and how to claim it are available on this website. Despite the fact that this lucrative tax incentive has now expired, there are still certain federal and state first time home buyer grants and programs that you may be able to take advantage of. Stay tuned for full details.
Under the provisions of the first time home buyer tax credit those qualifying as “first time home buyers” can receive a grant of up to $8,000 from the federal government towards their new home. Additionally, certain long-term residents may be eligible a reduced tax credit even if they don’t qualify as “first time home buyers”. As per certain legislative changes late last year, the income limits for those eligible to claim the tax benefit were raised to $125,000 for single tax payers (from $75,000) and $225,000 for married tax payers filing jointly (from $150,000) for sales occurring AFTER November 6th, 2009. The old limits still apply for sales between January 1st, 2009 and November 6th, 2009. The first time home buyer credit is reduced for single tax payers earning between $125,000 and $145,000 and for married tax payers (filing jointly) earning between $225,000 and $245,000. Singles earning more than $145,000 and couples filing jointly and earning more than $245,000 are not eligible for the first time home buyer credit. Click here for detailed qualification criteria and other restrictions.
Since the decline of the economy, the federal government has taken several actions meant to assist families and those adversely affected shaky job prospects and housing markets. Their policies revolve around the $787B stimulus package that was passed late last year. One provision, for example, allows home owners the ability to refinance their mortgage again despite having a low home equity. The also have the option to have their loan interest rates reduced. There are also elements of the stimulus package that could benefit first time home buyers. Under the guidelines of the bill, the first time home buyer stimulus package consists of increasing the home buyer credit. First time home owners can also avoid foreclosure in the midst of housing market that looks bleak and job cuts are rampant.
Prior to the passage of the stimulus package, the first time home buyer credit was only recently changed for the 2008 tax year. For homes that were bought in 2008, the credit was $7500 and was considered like a first time home buyers loan that was to be paid back over fifteen annual payments of $500 apiece. Under the stimulus package, the home buyer credit has been changed and increased to $8000 and more importantly, does not need to be paid back. This change in the policy applies to homes bought in 2008 so all new home buyers from 2008 and 2009 can benefit.
For taxpayers who filed their return under the old $7500 policy, an amended return can be filed to ensure that you receive the appropriate credit for your home purchase. Remember that the home must actually be paid before the credit can actually be claimed. Similarly, if you are building your own home, the IRS considers the purchase date to be the first actual date that you occupy your home. As long as you intend to occupy your home for at last three years, there is no need to repay the tax credit. However, if you change your mind and sell your home before the end of the first three years, then the credit must be repaid. This is to discourage “house flipping”. Additionally, if the home is no longer your primary residence by the end of the first three years, then the tax credit must also be repaid at that time.
For tips and facts about how you can benefit from Obama’s Home Stimulus Plan – or to find out if you qualify, visit our no nonsense home stimulus guide: http://ObamasStimulusPackage.net/stimulus-package-information