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The popular first-time homebuyer tax credit that was scheduled to end this month is being extended. President Obama signed a bill that extends the up to $8,000 tax credit for first-time homebuyers for seven months. An additional incentive for the housing industry is for homeowners. The $6,500 tax credit will benefit some existing homeowners who are also buyers and whose primary residence has been owned, used, sold, or being sold within at least five consecutive years of the previous eight years. The legislation is part of a bill that also extends unemployment benefits. Bruce Walker, Director of Marketing, RealEstate.com Reportedly, the credit would be available for people earning up to $125,000 a year and couples making up to $225,000 per year. This is an increase from the current income limits of $75,000 and $150,000, respectively. The extension of the first-time homebuyer credit lasts through June of next year. Buyers must sign a contract by the end of April 2010. The incentives come at a good time for the housing industry. "We're getting into a historically slow time of year. You have the holidays and folks just aren't in the market to buy a home. I think now, you're going see a little bit more interest and we may see some upticks through the end of the year that could carry some momentum into the first part of the year which is traditionally the heaviest homebuying season," says Walker. He believes these incentives will not only cause more homes to sell but will also have an impact on related industries. "I think one of the areas that will get a secondary benefit is going to be the home improvement industry. When someone buys a home they will often put additional work into it to make it their own. They'll paint, put up wallpaper, and hang current rods. They may clean floors -- so that home improvement sector is going to see, I believe, a secondary lift as well," explains Walker. What this means to consumers? "When they see that home prices have dropped, there's going to be fear in the market and people are going to wait to see other people get involved -- get back into the market. So, as consumers are pushed off the fence with these incentives I think we will see a strengthening of the housing market as a direct result and people are going to get re-engaged," says Walker. But some wonder are the incentives a risk that will cause homeowners to later default? "People have been skeptical of the economy for the last year or longer," says Walker. Economists with the National Association of Realtors estimate that approximately 2 million people will take advantage of the tax credit this year. |
Monday, November 23, 2009
Extended Tax Credit for HomeBuyers and Homeowners
Sunday, August 02, 2009
$8000 First Time Homebuyer's Tax Credit
Time is running out! Do not let an $8000 tax credit pass you by.
Imagine hearing this while on the next walk through of your future home, "Not only did the previous owners update the kitchen, replace the roof and install a brand new sprinkler system, but the United States government is going to sweeten the deal with eight thousand dollars."
For first-time home buyers willing to take the plunge into ownership between now and close to the end of 2009, a tax credit (that means cash) can be yours if you meet the qualifications.
Do not confuse this credit with the former program which was a loan that would have to be repaid over time. This is money in your pocket to furnish your new home with new carpet, perhaps an energy efficient central air and heating system, or for some, a second honeymoon to the Grand Caymans. They money is yours to do with as you please!
Many people have questions about the tax credit. Here's a few of the most common ones with answers:
1. Can I qualify as a first-time buyer if I have previously owned a home?
Yes, as long as you have not owned a home for three years prior to making your new purchase. If you sold your last home on May 1, 2006, you will qualify for the credit with a new home purchase on or any day after May 1, 2009. You must keep the home as your main residence for a minimum of 36 months after purchasing.
2. If I owe $2500 in taxes and I qualify for the $8000, what happens to the $5500 difference?
It comes to you in a refund check from the IRS. Any amount above what you may owe (if you owe anything at all) will be returned to you. Also, if you are scheduled to receive a return of $1300, you would receive a check or electronic funds transfer for $9300.
3. Are there any income limitations?
Yes. Individuals filing a gross income under $75,000 qualify for the full $8000 credit. Married couples earning less than a combined $150,000 qualify for 100% of the credit as well. Individuals earning between $75,000 and $95,000 will see a tiered credit. Married couples earning between $150,000 and $170,000 will also see a tiered credit in their return.
There is some talk in regards to an extension or increase to the amount of credit allotted as well as the time frame in which a buyer may take advantage of the program. There is even some thought that it will cover all home purchases, not just those made by first-time buyers. This is not set or guaranteed. The $8000 outlined in this article is, however, and is waiting to be claimed on your 2009 tax return.
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