On November 6, 2009, President Barack Obama signed a law that extends all the way through to next spring time. The law states that first-time home buyers get a tax credit of up to $8,000. The new law also states that repeat home buyers can get a tax credit of up to $6,500. However; the government estimates that this will cost approximately $11 billion dollars to help boost the sales of homes and help the struggling economy.
What is Similar About the Past First-Time Home Buyer Law and the New One?
Just as before, first-time home buyers get a credit of as much as 10% of the cost of their new home, with a maximum of $8,000. The first -time home buyer law applies to those who haven’t owned a home for at least 3 years.
- Home buyers may choose to claim their tax credit on their 2008 or 2009 returns, as for 2010 first-time home buyers, they may claim the credit on their 2009 or 2010 returns.
- All individuals claiming the first-time home buyer tax credit must use their new home as a main residence for the next three consecutive years after the final purchase.
- First-time home buyers are disqualified for receiving the tax credit if the purchase was made from an ancestor or beneficiary. This includes; parents, grandparents, children and grandchildren.
What Has Changed With the New First-Time Home Buyer Tax Credit Law?There are some basic rules for qualifying for the updated home buyer tax credit. In order to be eligible, the purchase of a home must coincide with the following deadlines and rules:
- To qualify for the new tax credit, a home buyer must have signed the contract before May 1, 2010.
- The home buyer must have closed the deal before July 1, 2010.
- For home buyers who make purchases after November 6, 2009 that cost more than $800,000, they will not be eligible to receive a tax credit.
New Tax Law Adds $6500 Credit to Repeat Home-Buyers and Homeowners
The new first-time home buyer tax credit is now available to repeat home buyers, as well. Those who have resided in one specific home for at least 5 years, of the past 8 years, are now eligible for a home-buyer tax credit of as much as 10% of the cost of their new home purchase. However; the maximum credit allowed is $6,500 for repeat home buyers.
Income Rules for Extended Home Buyer Tax Credit Law
The allowed income has generously increased with the updated first-time home buyer tax credit law. Here are the income rules for the tax credit qualification:
- Single tax payers have a varied limit of $125,000 and $145,000 of an adjusted gross income.
- Married tax payers have a varied limit of $225,000 and $245,000 of an adjusted gross income.
Congress Extends $8000 Homebuyer Tax Credit
With the First-time homebuyer and existing homeowner tax credit, the President is hoping for a huge boost to the ever so struggling economical crisis with home sales. More individuals now qualify for a home buyer tax credit.