In order to stimulate the housing market and the overall US economy, President Obama signed the new law that extends the first Homebuyer Tax Credit of up to $8000. to first home buyers until April 30, 2010. This law expands the credit to current homeowners that are purchasing a new or existing home between Nov 7, 2009 and April 30, 2010. The maximum credit for current owners is $6500. Existing homebuyers who have lived in their current home for at least five years are eligible. Qualified buyers have until July 1, 2010 to close on the purchase. Those who serve in the military and who are on extended duty outside the US can claim the credit until July 1, 2011, provided they sign the sales contract before May 1, 2011. There are some restrictions and income limits.
For example, the purchase must be a principal residence, not a vacation or investment home and the buyer must occupy the home for at lease three years. Single family homes, condos, townhouses and co-ops are included. The credit amount is determined by the price of the home and the buyer’s income. The credit may only be awarded on homes purchased for $800,000 or less. Single buyers whose income is up to $125,000 and married couples with incomes up to $225,000 are eligible and can still receive the maximum tax credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for buyers filing jointly but are still eligible up to that point. Buyers will not have to repay the tax credit as long as they occupy the home for three years or more. However, if the house is sold during the three year period, the full credit amount will be due upon the sale. If a buyer doesn’t owe the IRS the amount of their tax credit, they will receive a check from the government for the difference of what they owe and the tax credit that they are due. There are Anti-Fraud Provisions because many taxpayers who were not eligible for the credit had wrongly claimed it. Those listed as dependents on someone else’s tax return cannot claim the credit and taxpayers must also be at least 18 years of age by the date of the purchase. Homebuyers will now be required to attach a copy of the settlement agreement to the tax return as proof of the purchase.
The Multiple Listing Service of L.I. which represents Queens, Nassau and Suffolk Counties reported 2,708 closed sales for December 2009, representing a double digit increase of 38 percent over the number of closed sales a year ago. The number of monthly closed transactions has not exceeded the 2,700 mark since August 2007. The number of closed sales in the fourth quarter of this year compared to 2008 is almost double. The combination of lower home prices, the first-time homebuyer tax credit and mortgage rates near 5% (for a conventional 30-year fixed mortgage) has made buying a home more affordable, and smart buyers are rushing to take advantage of the opportunity. The number of sales has increased but the prices have not . However, if prices continue to fall by and additional 10%, but the interest rates increase by 1%, that would mean the same monthly payment today versus waiting. .
The following is a chart from the National Association of Realtors regarding the Homebuyer Tax Credit Changes. If you need more information, please contact your tax professional or the IRS.
For example, the purchase must be a principal residence, not a vacation or investment home and the buyer must occupy the home for at lease three years. Single family homes, condos, townhouses and co-ops are included. The credit amount is determined by the price of the home and the buyer’s income. The credit may only be awarded on homes purchased for $800,000 or less. Single buyers whose income is up to $125,000 and married couples with incomes up to $225,000 are eligible and can still receive the maximum tax credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for buyers filing jointly but are still eligible up to that point. Buyers will not have to repay the tax credit as long as they occupy the home for three years or more. However, if the house is sold during the three year period, the full credit amount will be due upon the sale. If a buyer doesn’t owe the IRS the amount of their tax credit, they will receive a check from the government for the difference of what they owe and the tax credit that they are due. There are Anti-Fraud Provisions because many taxpayers who were not eligible for the credit had wrongly claimed it. Those listed as dependents on someone else’s tax return cannot claim the credit and taxpayers must also be at least 18 years of age by the date of the purchase. Homebuyers will now be required to attach a copy of the settlement agreement to the tax return as proof of the purchase.
The Multiple Listing Service of L.I. which represents Queens, Nassau and Suffolk Counties reported 2,708 closed sales for December 2009, representing a double digit increase of 38 percent over the number of closed sales a year ago. The number of monthly closed transactions has not exceeded the 2,700 mark since August 2007. The number of closed sales in the fourth quarter of this year compared to 2008 is almost double. The combination of lower home prices, the first-time homebuyer tax credit and mortgage rates near 5% (for a conventional 30-year fixed mortgage) has made buying a home more affordable, and smart buyers are rushing to take advantage of the opportunity. The number of sales has increased but the prices have not . However, if prices continue to fall by and additional 10%, but the interest rates increase by 1%, that would mean the same monthly payment today versus waiting. .
The following is a chart from the National Association of Realtors regarding the Homebuyer Tax Credit Changes. If you need more information, please contact your tax professional or the IRS.
Millie Thomas, Broker/Owner
Landmark Realty of L.I., Inc.
6347 Rt. 25A
Wading River, N.Y. 11792
631-929-3600
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