Tax Credit Deadlines for Homebuyers

You may have a lot of questions about the current $8,000 federal tax credit for first-time homebuyers. 

Here are the short answers:

1.         First-time homebuyers have until April 30, 2010, to sign a contract for the purchase of single family homes, condominiums and cooperatives for use as a primary residence.  Settlement must occur on or before June 30, 2010.

2.         The maximum amount of the credit is $8,000, or 10% of the sales price up to $8,000.

3.         The purchaser must reside and use the home as a primary residence for 36 consecutive months, or the tax credit may have to be repaid.

4.         Individuals earning up to $125,000 a year and couples earning up to $225,000 a year are eligible.

 5.         Anyone taking the credit from a home purchased in 2010 may take the Credit on their 2009 federal tax returns which is due April 15, 2010.

A non-dependent child over the age of 18 can qualify as a first time homebuyer and receive the credit even if a parent who does not qualify as a first time homebuyer co-signs the mortgage. The property must be the non-dependent child’s principal residence to qualify.

There is also a credit for current, qualified homeowners for a $6,500 federal tax credit.

As an alternative to the tax credit describe above, residents of the District of Columbia may be eligible for a tax credit of up to $5,000 even after April 30, 2010, assuming that the credit is extended beyond that date. The extension has not, however, been officially enacted by Congress, but is in a conference committee.

Please note that at no time will purchasers of homes in the District of Columbia be eligible for both the $8,000 tax credit and the $5,000 tax credit. Taxpayers must opt for one or the other.

It does not appear that this $8,000 tax credit will be extended beyond April 30, 2010.

A tax advisor should always be consulted to determine exactly what tax implications these issues will have on you and your property before taking any action on your own.

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