Dec. 1, 2009
Procastinators, you're in luck. If you were thinking of buying your first home but just couldn't get it together in time to take advantage of the $8,000 federal tax credit, you have an extension. Congress gave you about five more months.
Good news, too, for first-time buyers with incomes higher than the previous allowable limits for the incentive program: The credit is now offered to singles who earn a modified adjusted gross income up to $125,000 and married couples with income up to $225,000. The credit starts to phase out at those amounts and is unavailable above $145,000 (singles) or $245,000 (couples).
And for you homeowners looking to move who wondered where your tax credit was, Congress included you this time. The program has been expanded to include current homeowners who buy a home if you have used your existing home as a principal residence for five consecutive years out of the last eight. For this group, though, the maximum tax credit is $6,500. The same income limits apply.
To claim the tax credit, you must have a signed, binding contract in place by April 30, 2010 and must close the transaction before July 1, 2010.
The tax credit applies only to homes purchased for $800,000 or less. One other restriction: You must occupy the home for at least three years; otherwise you are required to pay back the full credit upon the sale of the home.
There are a few special provisions for members of the military, members of the U.S. foreign service, and employees of the intelligence community serving outside the United States. People in these groups get an extra year to buy a property and take advantage of the credit. Many homeowners in these groups also qualify for an exception from the three-year requirement to live in the property purchased.
This opportunity definitely presents some timing issues. First, make sure you can meet the deadlines mentioned above. Identifying and buying a home takes time. Get the wheels in motion by talking to a Texas REALTOR®. Also, if you complete the transaction in 2010 (and before the deadline), you can choose to take the credit on your 2010 or 2009 return.
But do yourself a favor … don't procrastinate.
