In a previous post, the 2009 Homebuyer Credit Extension and Related Divorce Issues, and in a more recent post, I discussed a possible extension of the First-Time Homebuyer Tax Credit, which was applicable only to home purchases completed on or before November 30, 2009. Well, congress has indeed extended the credit into next year and also made it available to certain taxpayers who already own a home.
For first time homebuyers, the credit is now applicable if the sales contract is fully executed by April 30, 2010 and the closing occurs by June 30, 2010. Moreover those dates are extended to April 30, 2011 and June 30, 2011 respectively for qualifying members of the military serving extended duty outside of the country. You are generally a qualified first-time homebuyer if you have not owned and used another personal residence at any time during the three years prior to the date of the new purchase.
The credit remains to be valued at the lesser of 10% of the purchase price or $8,000 and can be part of your refund if you owe less than $8000 in taxes. There are also phase-outs of the credit for taxpayers with certain adjusted gross incomes (over $125,000 for singles and $225,000 for married couples), but those are significant increases of the original income caps. Further, the credit is not available when a home purchase price exceeds $800,000. For more information on the mechanics of the original credit, please refer to this previous post and the other posts mentioned above.
A reduced amount of the credit (up to $6,500) is also now available to certain existing homeowners who have lived in their current home for five out of the last eight years. The same deadlines, income caps and purchase price limitations discussed above apply. Moreover, although your new home must be your principal residence, there is nothing in the new legislation requiring you to sell your existing home.
Thus, if you are even thinking of purchasing a new home, it may be a good idea to check out your local market because April will be here before you know it.