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Thursday, March 25, 2010 12:58 pm

The time is right to seal the deal on your new home

Popular incentives for first time and ‘move up’ homebuyers end April 30, 2010

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The warm prospect of more affordable home prices, attractive mortgage rates and a stable economy will likely draw more real estate shoppers to the market this spring. But it’s the opportunity for cash back in their pockets that will turn many shoppers into buyers -- and quickly.

The potential benefit is huge: as much as an $8,000 tax credit for first-time buyers and a $6,500 credit for move-up buyers.

First-timers who intend to make a move should act promptly, do their homework and proceed with caution. Review the guidelines closely. Consult a tax professional if you have questions. And use the information in this guide to help clarify steps you need to take on the journey to owning a home.

$8,000 first-time tax credit

The $8,000 tax credit is for first-time homebuyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

  • The tax credit is equal to 10 percent of the home’s purchase price. up to a maximum of $8,000.
  • The tax credit applies only to homes priced at $800,000 or less.
  • The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after purchase.
  • The tax credit now applies to sales occurring on or after Jan. 1, 2009, and on or before April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010 a home purchase completed by June 30, 2010, will qualify.
  • For homes purchased after Nov. 6, 2009, and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

$6,500 repeat buyer tax credit

To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight.

The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after purchase.

  • The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
  • The tax credit applies only to homes priced at $800,000 or less.
  • The credit is available for homes purchased after Nov. 6, 2009, and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
  • Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.


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