If you weren't in a position to buy a house by the original First-Time Home Buyers Tax Credit deadline of December 31, 2009 then you might be happy with the six-month extension announcement. Now if you close on a home purchase before June 30, 2010 you could be eligible for up to $8,000 tax-credit.
As a reminder these are the points you need to know about the "First-Time Buyer" aspect of the program. For information about the newly added "Trade-Up" portion for repeat buyers see yesterday's post. (BTW: you don't have to buy a more expensive home to qualify as a trade-up buyer.)
First Time Buyers (defined): The government’s definition of a first time buyer is anyone who hasn't owned a principal residence for three years before buying a house. So if this is your very first purchase, you qualify. If you previously owned a home, but for whatever reason haven’t owned a home in three years, you qualify. If you owned a home, but it was not your principal residence, you qualify.
up to $8,000: The tax credit is equal to 10% of the home purchase price or a maximum of $8,000. So if you purchase a home for $70,000 your credit is $7,000. If you purchase a home for $160,000 your credit is $8,000.
Income limits: The tax credit is limited to single buyers with a modified adjusted gross income of $75,000 or less and $150,000 for married couples. If you do not meet these limitations consult your tax advisor for possible reduced credit eligibility.
No Repayment: Previous First Time Buyer tax credits included a repayment clause. The credit was treated as a loan and had to be repaid to the government via 15 year installment payments—not so with the new tax credit.
Recapture: If you sell the home during the first three years of ownership you will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce. Consult your tax advisor.)
Lenders have been hesitant to sign new loans. President Obama is hoping that the First Time Home Buyers Tax Credit will change that. Meanwhile Coors Credit Union is ready and willing to help you purchase a home with an affordable mortgage. Contact us today to and get pre-approved in time to take advantage of this buyer’s market.