$8,000 Federal Tax Credit
Still time to take advantage of tax credit
You've probably heard about the $8,000 tax credit for first-time homebuyers and that the deadline was extended. But what does it mean, and more important, can you take advantage of it?
There's still time to get an $8,000 bonus on your dream home. The credit, originally scheduled to expire in 2009, has been extended until this spring.
You can claim the credit if you sign a sales contract before May 1 and close before July 1. Members of the military who serve extended duty outside the US have until July 1, 2011, to claim the credit, as long as they sign a contract before May 1, 2011.
And that's not all. The legislation also expands the credit, making it available to some homebuyers who already own a home but would like to trade up.
Here's who stands to benefit from the expanded homebuyers' credit.
Big bonus for first-timers
First-time homebuyers are defined as those who haven't owned a home in the three years before the purchase. If your spouse owned a home in that time frame, you're not eligible. Those who qualify can claim a tax credit for 10 percent of the purchase price, up to a maximum of $8,000.
The credit is refundable, which means if you owe less than $8,000 in taxes, you'll receive a refund for the difference. However, the credit is not available for home purchases that exceed $800,000.
The new legislation also expands the income cutoff levels. Previously, singles with incomes of more than $95,000 ($170,000 for married couples) were ineligible for the tax credit. Now, single homebuyers with annual incomes of up to $125,000 qualify. Married couples who file joint tax returns can earn up to $225,000 annually.
Also, the credit doesn't have to be repaid unless you sell your home within three years.
Existing homeowners
Homebuyers who have lived in their current home for five out of the past eight years qualify for a tax credit of up to $6,500. The deadlines are the same as for first-time homebuyers.
The income thresholds for existing homeowners also are the same as those for first-time homebuyers. Likewise, existing homeowners can't claim the credit if they purchase a home for more than $800,000.
In addition, the new home must be your principal residence and you can't us the credit to buy a vacation home.
Frequently asked questions.
