Who Qualifies as a First-Time Home Buyer

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.

More Buyers Qualify for the Home Buyer's Tax Credit

On Friday President Obama signed the extension to the First Time Home Buyer's Tax Credit. The program was set to expire this December 1st, but was given a six-month reprieve and will now end June 30, 2010.

To receive the $8,000 contract buyers must sign a contract by April 30, 2010 and close on the home by June 30, 2010. All of the requirements from the bill's first round still apply, however, now even more homeowners will be eligible. The bill now includes buyers who want to trade up.

The tax-credit for current home owners who sell their home to buy a new one is up to $6,500. This portion of the tax-credit has been deceptively referred to as the "trade up" credit, but actually you don't have to purchase a bigger or more expensive home to qualify.

Who qualifies?
You must have owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. The bill states that the law tests home ownership for both home buyer and his/her spouse.

How much is the credit?
The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.

Is any home eligible?
Purchases of homes priced above $800,000 are not eligible for the tax credit.

As for first-time buyers there are income limit restrictions:
The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phaseout range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.

New Construction counts too. If you are having a home built both the first-time or the repeat, can apply for the tax-credit as long as the closing date is by the June 30, 2010 deadline.

For more details regarding the Home Buyers' Tax Credit for both first-time buyers and repeat buyers go to Home Buyer's Tax Credits.