Homebuyers Tax Credit Extension

Wednesday, November 25, 2009

If you’ve been wanting to take advantage of the low mortgage rates and housing prices currently available, now is definitely a good time to do so. For those unaware, the popular first-time homebuyers tax credit has been recently extended by Congress until April 30, 2010. The extension spells very good news for the national housing market and overall economy as the first two versions of the credit had a positive impact on the housing market. The National Association of Realtors reported that as many as 1.2 million new and resale homes were completed so far this year because of the tax credit.

With the program, first-time home buyers are eligible for $8,000 on the tax credit which can now also be used as a down payment on a home mortgage depending on the type. The expanded credit also contains a provision that provides a new credit of $6,500 to homeowners that have lived in their homes for at least five years and are looking to relocate. Income limits for the program were also increased, further expanding the number of Americans that qualify for the credit. In order to qualify as a first-time buyer you now must make under $125,000 if single and $250,000 if married. However, single homeowners that earn between $125,000 and $145,000 and married couples earning between $225,000 and $245,000 are eligible to receive a partial credit.

Homes that cost more than $800,000 are not eligible for the credit. Additionally, you cannot have owned a primary home within the past three years and are required to stay in your current home for at least three years. If you decide to sell your property within three years of the purchase date than you are required to return the full amount of the credit that you received.

Applying for the tax credit is very straightforward. All that you have to do is claim the amount you are eligible for on your tax return. No additional forms or evaluations are needed. If you are like most people and have already filed your return, you can file an amended return for 2008 to claim the credit or simply wait until you file your 2009 return.

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