Happy spring everyone! Here at BIDaWIZ, we’ve been seeing a lot of “spring time” questions – you know, questions that have to do with things like marriage and finances, taxes (did you file on time?), home purchases and more. Speaking of that last item, if you’re looking to take advantage of the First-Time Home Buyer Tax Credit, there’s a ton of information out there – perhaps a little too much information. To help, boil everything down into digestible terms we all can understand, we’ve outlined the basics of what you need to know…
Deadline is April 30th, Next Friday
First off, the First-Time Home Buyer Tax Credit deadline is April 30, 2010. Now that doesn’t mean you have to have closed by that date. What it means is that, in order to qualify, you need to have a binding sales contract signed by April 30, 2010 and the purchase needs to be completed by June 30, 2010.
How Much is the Credit?
Everyone’s hearing different things when it comes to how much you can be credited. Here’s the answer: The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $8,000. Done and done.
Your Income Level Does Matter
Lots of people are asking about their income’s impact on whether or not they qualify. For sales occurring after November 6 of last year, the income limit for single taxpayers is $125,000-$145,000; the limit is $225,000-$245,000 for married taxpayers filing a joint return.
Why the ranges? Say you’re single and make under $125,000 – you qualify for the full credit. But say you make $135,000 (right in the middle of the range) – you’ll get a percentage of the credit based on a simple calculation.
What does “First-Time Home Buyer” technically mean?
It doesn’t mean that this is the first home you’ve ever purchased. The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. So even if you owned a house from 1993 to 2002, but haven’t owned since, you qualify. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
Current Homeowners looking to Buy a New Home
What about if you’ve owned a home for a long time and are looking to buy a new one? What then in terms of tax credit? A slightly more complicated question, but we’ll break it down. If you are a long-time resident and owner of the same main home and you buy a new home, the law may allow you to claim a homebuyer credit of $6,500. The new home must be under binding contract before April 30, 2010 and closed by June 30, 2010.
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