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Extension and Expansion of the Home Buyer Tax Credit

Would they wouldn’t they? The big question of the year in many American’s minds – would or wouldn’t the First Time Home Buyer’s Tax Credit be extended?

At last we were given an answer when President Obama signed into law an extension of the $8,000 credit and then went one step further by extending it to existing home owners*.

As a home owner or a home buyer how does this extension and expansion affect you? Below are some quick facts about the law that may help clear up some of those question marks in your head.

The information below was provided by Silvia Ward of United Lending

Many of the guidelines for the new home buyer tax credit are the same as the previous one.
Here are a few of the key changes:
Tax Credit Extended to Buyers - Ausitn Texas

  • Taxpayers must be in an executed contract to close, before midnight on April 30, 2010. The closing must occur before midnight on June 30, 2010.
  • *Previous homeowner’s who fall within the income limits and other qualifying guidelines will be eligible for the $6,500 tax credit. This includes buyers who are already under contract but does not include those who have already closed.
  • The maximum home price is capped at $800,000.
  • Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.
  • Taxpayers can claim the credit on their 2009 income tax return for purchases made in 2010.
  • Due to issues with fraud, taxpayers will now need to provide a settlement statement from closing before the IRS will release the credit.

*$6,500 tax credit for repeat buyers if they’ve lived in their current home for five of the past eight years.