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HOT NEWS…Congress Extends First-Timer Tax Credit & Adds A New One For Move-Ups

November 5th, 2009 categories: Buying, The Economy

NAR Tax Credit Chart$8,000 For First-Timers, $6,500 For Some Move-Ups

Congress earlier today overwhelmingly approved long-awaited legislation extending the tax credit for first-time buyers and adopting a new tax credit for many move-up buyers.

Assuming President Obama signs the bill, which he’s already said he’ll do, the new law will go into effect as soon the existing tax credit expires at the end of this month.

So if you’re in escrow and qualify for the current $8,000 first-time buyer credit, as long as you close escrow by Nov. 30, nothing changes.

The new law extends the credit to Apr. 30, 2010 and allows an additional 60 day extension to close escrow for those who are already in contract by that date.

If you’re a thrill seeker, that means you can wait to get an offer accepted until Apr. 30 and close escrow 60 days later, on June 29, and still qualify for the credit.

Here are the major features of the new law:

  • First-time home buyers (defined as not having owned a home in the last three years) will be eligible for a federal tax credit of up to $8,000.
  • Move-up buyers who have lived in their current residence consecutively for at least five of the past eight years, will be eligible for a $6,500 tax credit.
  • Income limits have been expanded from $75,000 to $125,000 for individuals and from $150,000 to $225,00o for married tax filers.
  • The cost of the home must be $800,000 or less.
  • For anti-fraud purposes, those claiming the credit now must attach home purchase documentation to the tax credit claim form.

The extension should come as good news to all those first-time buyers who have been patiently waiting for the “right home” to come on the market or for their offer to be accepted in the current multiple-offer environment. They’ll now have another five months to find a home and even an additional two months to close escrow if necessary.

It should also come as great news for those who’ve been in their current home for a while but have been thinking about buying a different home.

To see a chart that shows the major differences between the current credit and the one that goes into effect next month, click here or on the graphic at the top of this post.

These of course are just some of the highlights of the new tax credit. So definitely check with your tax adviser to be sure just how this new law affects you.

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This entry was posted on Thursday, November 5th, 2009 at 8:27 pm and is filed under Buying, The Economy. 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.

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