Marty Millner

Tax Credit for home purchase, revisited, Yardley, Newtown, Upper Makefield, Lower Makefield, Bucks County, Pa.

I thought it would be helpful, today, to take a more detailed look at the 2010 extension of the 8,000 first time home buyer tax credit, along with the new, $6500 credit that is available to existing home owners, who purchase a house.

I have pointed our in previous posts, that the statistics showed that the first time home buyer tax credit, that expired on November 30th, last year, clearly had an effect on the number of transactions that occured in November.

Here is a summary of the new and updated provisions of the tax credit, that was approved following the expiration of the original tax credit provision.

8,000 credit for first time home buyers who have a contract by April 30, 2010, and who close by June 30, 2010

6,500 credit for homebuyers who have lived in their current home for at least 5 years, and who wish to sell their home in order to purchase another primary residence.  This provision is new.   As above, the contract must be in place by April 30, 2010 and closing must occur on or before June 30, 2010.

Income limits have increased, so that couples earning as much as $225,000, and individuals earning up to 125,000 can quailify.  For single buyers with incomes between 125,000 and 145,000, the credit decreases, and for those filing jointly, it decreases with incomes between 225,000 and 245,000.

Homes purchased above 800,000, do not qualify.

If 2 or more unmarried individuals buy a primary residence, they can allocate the credit among the owners using any reasonable method.  The total amount allocated cannont exceed the 8,000.  A reasonable method is any method that does not allocate all of part of the credit to a co-owner who is not eligible to claim that part of the credit.  If you have questions about this, or any other provision in the tax credit rules,  you should speak with an accountant or attorney who is familiar with the tax credit provisions.

I think the most important element to keep in mind, is that in order to claim the credit, you must be under contract to purchase a home, by April 30th, 2010, and close by June 30, 2010.  I know this provision is impacting some of my clients, both buyers and sellers, who do want to be able to take advantage of the credit.  We are seeing houses come on the market sooner, and buyers looking for homes sooner than what is normally expected, at this time of the year.

Let me know what you think of the tax credit, and whether you think it will help the real esate market.

This entry was posted on Friday, January 15th, 2010 at 9:16 am and is filed under Buying Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Jeff Green said at January 16th, 2010 at 6:39 pm

   This article is a good source of information regarding the first time home buyer tax credit. Excellent post Marty! Keep it coming.

2. mmillner said at January 16th, 2010 at 6:52 pm

   Jeff;
   Thanks for the kind remarks, I appreciate it.

Leave a Reply