Update: On June 16th the Senate passed the proposal with a 60-37 vote in favor of an extension to the $8,000 Home Buyer Tax Credit. This will extend the closing date deadline Home Buyer Tax Credit to September 30, 2010. It has yet to be signed into law by the president, however with a 60-37 vote in favor of the extension you can pretty much bet that President Obama will sign the extension. The extension would only allow people who were already under contract by April 30. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline. The government is getting this money which is measured to cost $140 million by denying businesses the ability to deduct from their taxes punitive damages paid when losing lawsuits or judgments.
Purchase Before April 30, 2010 and Close by June 30, 2010
$8,000 & $6,500 Tax Credit For Home Buyers
The $8,000 and $6,500 tax credits for home buyers should entice some home buyers to “jump-in” and buy a home, but only time will tell.
Do You Qualify?
To Qualify for the Tax Credit:
- Available to first-time home buyers ($8,000) and move-up buyers ($6,500).
- The tax credit is not a loan and does not require repayment*
- The tax credit reduces the home buyer’s tax liability i.e. if the buyer’s liability is less than $8,000, the remaining credit will be issued as a check
- Home purchase must be for a primary residence
- The credit is available on a home purchase before April 30, 2010 and close by June 30, 2010
- The credit is not eligible if the seller is a relative of the buyer – Thanks Tina Fountain
*If the home is sold within 3-years, the tax credit must be re-paid
UPDATE: $8,000 Tax Credit Expanded, New Legislation Opens Tax Credit to Additional Buyers…
On Friday October 6th, 2009 the President signed into law a bill that changed the scope of the tax credit for “New Home Buyers”. The Bill not only extends the tax credit that was scheduled to expire November 30th 2009, it also changed the criteria for qualification. The new bill extends the expiration date on signing a sales contract to April 30, 2010 and the home must now close by June 30, 2010.
An additional year has been added to these dates for military personnel who have served extended duties outside of the U.S. The legal term “first time home buyer” is described to mean anyone who has not purchased a home in the past three years. For those who qualify you can claim up to 10% of the closing price of the home with a maximum credit of $8,000. This credit is refundable. What this means is that if you owe less than $8,000 in federal taxes the difference will be paid to you.
Additional expansion of the bill changes that MAGI (maximum adjusted gross income) of a single filer up from $95,000 to $125,000 and makes reduced tax credit available with a MAGI of $145,000. For married or joint filers with a MAGI of $170,000 or more found that they were ineligible under the old law. The new bill extends the MAGI for married or joint filers to phase out between $225,000 and $245,000. The available credit does not have to be repaid if you remain in the home for a period of three years.
If you are an existing homeowner who has lived in your primary residence for 5 of the last 8 years you can now qualify for a $6,500 tax credit on an additional home purchase. The new legislation mentions nothing about you being required to sell your 1st residence. The legislation only mentions that you would no longer qualify for tax breaks on your 1st residence.
Within the new law anti-fraud measures have been added. These measures were necessary due to the amount of people who claimed the home buyer’s tax credit and did not qualify. The new law prevents anyone who has been claimed as a dependant on someone else’s return from receiving the credit. The law also states that you must be 18 on the date of the purchase of the home to qualify. Additional anti-fraud measures require that you attach your settlement agreement to your tax return.
Source: Senators agree to extend homebuyer tax credit
See Also: Government Website – Home Buyer Tax Credits
BEGIN ORIGINAL $8,000 FIRST TIME HOMEBUYER CREDIT ARTICLE
In Colorado, President Obama signed the massive economic stimulus plan into law making the $8,000 home buyer tax credit official.
The American Recovery and Reinvestment Act of 2009 is a $787 billion stimulus package meant to save or create as many as 3.5 million jobs. The package allocates money for tax relief, state and local fiscal relief, infrastructure and science, protecting the vulnerable, health care, education and training, energy and other things.
This stimulus bill will help lead our nation towards debt levels not seen since the darkest days of World War II and represents the largest federal stimulus package in our nation’s history.
Stolen from CNN.com
The final plan set aside stimulus money at the cost of $2 billion – $8 billion for first-time home buyers as well as incentives for home owners that make energy saving improvements to their existing home. Although some incentives for home buyers were included in the final plan, the plan’s home buyer incentive fell short of the $15,000 home buyer tax credit requested by home builders and housing professionals across the nation.
Home Energy Credit
Tax Incentives for Improving Existing Residential Real Estate
- Homeowners can recoup up to 30% of the cost of installing energy saving features in their home
- The credit is valid on up to $1,500 of improvements
- Over $4 billion was allocated for the Home Energy Credit
- Examples of improvements: Energy Efficient Windows and Doors, Air Conditioning, Furnaces, Water Heaters
Breakdown of the Stimulus Package’s Expenditures
- Tax Relief – $288 Billion
- State and Local Fiscal Relief – $144 Billion
- Infrastructure and Science – $111 Billion
- Protecting the Venerable – $81 Billion
- Health Care – $59 Billion
- Education and Training – $53 Billion
- Energy – $43 Billion
- Other – $8 Billion
Tomorrow, in Arizona (America’s best state 
), President Obama will outline a plan to help decrease foreclosures and help struggling homeowners meet their current financial commitments. The new plan is part of TARP 2, The 3 step financial Stability Plan involving a government investment of up to $2 trillion dollars. Limited TARP 2 details include analyzing and investing in struggling banks, creating a “bad bank” for purchasing unhealthy assets from financial institutions and investing funds in stimulating business and consumer lending.
Related Resources
Full Details of the American Recovery and Reinvestment Act of 2009 Recovery.gov
Wikipedia About Economic Stimulus Plan
Without question the stimulus package has aided a struggling economy, in particular, housing sectors across the western world. I still remain concerned that the creation of the stimulus has in fact aided the initial problem. People buying into a market that they cannot afford. I also wonder if the prices therefore are inflated and have not bottom out!
This could be a brilliant incentive plan, I know that I am a first time buyer and looking for a home to buy, but to be honest over the past few years I have held off and just rented due to the silly prices and now the difficulty in justing getting a mortgage form a lender. So I for one am happy this is happening for first time buyers now!
.-= Peter Franks´s last blog ..Bad Credit Bank Accounts =-.
The prices in Connecticut are still ridiculous, so even with the credit I’d rather rent. This state is a joke! No wonder why everyone is leaving.
Its been busy in SC for the past few weeks. It sure has helped our business. Lets hope that it will continue to prosper.
.-= Columbia SC Real Estate´s last blog ..Palmetto Heroes | Homes for Heroes Down Payment Assistance =-.
Any chance of this being extended again? It has helped stir up the housing market a bit, but I know it can’t last.
Yeh we picked up our tax credit just in time… seems like the credit should stimulate new home purchases and slowly bring the market back to equilibrium… This has been tough on so many businesses thank god our garage door repair company seems to be going strong… I guess great service and fair prices really do pay off..
Garage Door Repair
Well the tax credit has expired and new home sales are starting to suffer:( I wonder if they will implement any more stimulus deals to get the ball rolling again or just let the market clean itself out?
@Thomas – Yesterday June 16 the Senate extend the closing date deadline of the Tax Credit to September 30, 2010.
Is there any word on whether the government will be pursuing the funds that were given to unqualified buyers?
Hopefully Congress can get this extended ever further. Sales are falling off a cliff.
Cheers!
M
The tax credit was a really awesome incentive for people to buy. Hopefully the housing prices will rise instead of fall and force the people who took advantage of it to lose their house and then have to pay the money back to the government.
John- Home Depot also has contractors for solar panels. This is another tax credit that should be considered. I believe these companies will also share in the costs of installation etc.