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Home Buyer Tax Credit - Frequently Asked Questions
Q. What is the $8,000 Tax Credit?
- An expansion of the Housing and Economic Recovery Act of 2008 which allows homes purchased in 2009 to receive up to $8,000 tax credit with no repayment required.
Q. What are the main changes to the Extended Home Buyer Tax Credit from the previous Home Buyer Tax Credit?
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
- Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
Q. Who qualifies for the extended credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
Q. Which properties are eligible?
- Extended Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
Q. How much tax credit is available?
- First time home buyers is allowed a maximum of $8,000.
- Current home owners are allowed a maximum of $6,500.
Q. How is the tax credit determined?
- 1. Credit may only be applied to homes purchased for $800,00 or less.
- 2. Under the Extended Home Buyer Tax Credit effective November 7, 2009, single buyers with incomes up to $125,000 and married couples with joint income of $225,000 or less qualify for the full credit.
Q. What if the buyer(s) income exceeds these requirements, can a credit still be available?
- Yes, if the single buyer earns between $125,000 and $145,000 or the buyers filing jointly earn between $225,000 to $245,000 a decreased credit is allowed decreasing as the income reaches the maximum allowed. No credit is given beyond the maximum qualifying incomes.
Q. When does the home have to close by to qualify for the tax credit?
- As long as a binding contact is in effect by April 30, 2010 the purchaser will have until July 1, 2010 to close.
Q. Will the credit have to be repaid?
- No, as long as the buyer occupies the house for 3 years or more. If the house is sold in the first 3 years the full amount credit will be recouped on the sale.
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