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Home Buyer Tax Credit Extended – Nov 6, 2009

November 7, 2009

Congress has extended and expanded the Home Buyer Tax Credit and expanded it to include 1st time buyers and some ‘move up’ buyers who already own homes. The bill, ‘The Worker, Homeowner, and Business Assistance Act of 2009, was signed into law on Nov. 6, 2009. Information is available at the IRS website: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

This is good news for buyers who were trying to take advantage of the tax credit, but were not quite ready to buy, or were involved in transactions which couldn’t close by the previous November 30, 2009 deadline. It also encourages home owners who want to move, but have been on the fence about whether the time is right.

The new tax credit provides the same 10% credit up to a maximum $8,000 to 1st time buyers, defined as buyers who haven’t owned a home in the past 3 years. It also provides a 10% up to a maximum of $6,500 credit for ‘move up’ buyers who have owned their present homes for at least 5 years of the previous 8 years. Home owners who are downsizing are ‘moving up’ under the act. The new home does not have to be higher priced than the previous home.

The new credit beginning Nov 6, 2009 also expands the income limits for qualified buyers. There maximum income restrictions are $125,000 for an individual, $225,000 for a married couple. The previous income limits were $75,000 for a single buyer, and $150,000 for a married couple filing jointly.

Qualified properties are the home owner’s principal residences with a purchase price up to $800,000. Sales between family members do not qualify under the act.

The extended credit requires that buyer’s have an agreement by April 30, 2010 and close by June 30, 2010. That means that the time to get ready to buyer and/or sell is now. Preparation starts with mortgage pre-approval so that any credit or available cash issues are addressed while there is some time to correct them.

For further details about the qualifying under the new or previous acts, buyers should consult their tax accountants.

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