More homebuyers can enjoy tax credit
Your real estate agent isn’t returning your calls, your bank wants your income tax returns for the last 15 years, and you’re getting some weird vibes from the people who live next door to the house you’re trying to buy.
These home-buying potholes won’t prevent you from taking advantage of the $8,000 first-time homebuyer’s credit, so relax. A bill signed into law Friday by President Barack Obama extends the credit, originally scheduled to expire Nov. 30, until next spring. That gives you plenty of time to Google the neighbors before closing the deal.
And that’s not all. The legislation also expands the credit, making it available to some homebuyers who already own a home but would like to trade up to a nicer place.
The expanded tax credit was included in legislation that extends unemployment benefits by at least 14 weeks in all 50 states.
Jobless workers in states with high unemployment rates are eligible for an extension of up to 20 weeks.
On Friday, the government announced the unemployment rate exceeded 10 percent for the first time since 1983.
Here’s who stands to benefit from the expanded homebuyer’s credit:
• First-time homebuyers. The law defines “first-time homebuyer” as someone who hasn’t owned a home in the three years before the purchase. If your spouse owned a home in that time frame, you’re not eligible. So, those eligible can claim a tax credit for 10 percent of the purchase price, up to a maximum credit of $8,000. The credit is refundable, which means that if you owe less than $8,000 in taxes, you’ll receive a refund for the difference. The credit is not available for home purchases that exceed $800,000.
You can claim the credit if you sign a sales contract before May 1, 2010, and close before July 1. Members of the military who serve extended duty outside the United States have until July 1, 2011, to claim the credit, as long as they sign a contract before May 1, 2011.
The legislation also expands the income cutoffs for the credit. Single homebuyers with modified adjusted gross incomes of as much as $125,000 qualify for the full credit; those with MAGI of as much as $145,000 can claim a reduced credit. For married couples who file joint tax returns, the credit phases out between $225,000 and $245,000. Previously, singles with MAGI of more than $95,000 and married couples with MAGI exceeding $170,000 were ineligible for the credit.
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