Qualified first-time homebuyers only have until November 30th to finalize the purchase of a home and receive up to $8,000 from the government. Since it takes a few months or more to locate a home, obtain financing, and close on the property, now's the time to check out the open houses in the neighborhoods where you want to live. It probably also makes sense to get pre-approved for a mortgage in order to save time once you find your dream home.

In an attempt to buoy the housing market while still in office, President Bush introduced a $7,500 first-time homebuyer credit as part of the Housing Assistance Tax Act of 2008. This tax credit was to apply to homes purchased between 4/9/08 and 6/30/09, and was equal to the lower of 10% of the home's purchase price or $7,500.

The 2008 version of this tax break contained a unique feature, however. Anyone receiving this tax credit would need to repay the amount of the credit over fifteen years, making it more like an interest-free loan from the government than a true tax credit. So if you got the full $7,500 first-time homebuyer credit, you would report and pay an extra $500 annually as part of your tax return until you repaid the government in full.

Extended and Improved

President Obama extended and improved the first-time homebuyer credit as part of the American Recovery and Reinvestment Act of 2009. Here are some of the 2009 changes to this tax break:

· Extended the time for first-time homebuyers to purchase a home and qualify for this tax break from 6/30/09 to 11/30/09.

· Increased the tax break by $500 - from $7,500 for homes purchased between 4/9/08 and 12/31/08 to $8,000 for homes purchased between 1/1/09 and 11/30/09.

· Waived the repayment requirement for homes purchased in 2009 that are owned and used as a principal residence for at least three years.


Find out more at www.mdtaxes.com/news0709.html

Zip Code: 01801

However, is the tax credit subject to income limits?

Zip Code: 10020

Hi,

Here is the info you are looking for. It was from an article posted in our December newsletter available at www.mdtaxes.com/news1209.html:

$8K HOMEBUYER TAX CREDIT GETS EXTENDED AND EXPANDED


On November 6, 2009, President Obama signed The Worker, Homeownership, and Business Assistance Act of 2009 into law. As part of this Act, the $8,000 First-Time Homebuyer Tax Credit was extended and expanded. The Act also instituted a $6,500 tax credit for repeat homebuyers. Here are the basics:

The $8k first-time homebuyer tax credit has been extended to include homes under contract by April 30, 2010 and purchased by June 30, 2010. Only individuals who have not owned a home for three years up to the date of purchase qualify.

A new $6.5k repeat homebuyer tax credit was instituted for post November 6th transactions. To qualify, you need to own your principal residence for five consecutive years of the eight years prior to the purchase date.

The income limitation for this credit has increased for all post November 6th transactions as follows:
Phase-out Range to Qualify for Both Homebuyer Tax Credits

Pre-11/7/09 Post 11/6/09
Single Individuals $75k-$95k $125k-$145k
Married Couples $150k-$170k $225k-$245k

No credit is allowable for homes with a purchase price of greater than $800,000 for post 11/6/09 transactions.

The post November 6th credit is not available to children under the age of 18, or to individuals claimed as dependents on another person's tax return.

The IRS has promised to issue an updated Form 5405, First-Time Homebuyer Credit, shortly. The new version of this form will combine the pre and post-November 6th rules, and will be a good resource for anyone who purchased a home during the year.

Zip Code: 01801