Ins and outs of the home buyer tax credits
As expected, on Thursday night the U.S. House of Representatives passed the first time homebuyer tax credit extension and the President has signed it. The bill extends the current $8,000 tax credit deadline to April 30, 2010. You must be under contract on a home by April 30 and then close by June 30 in order to be eligible to take advantage of the credit. Homes costing $800,000 or less are eligible. (In case you were wondering, there are over 1,500 homes in the north metro Denver area in this price range.)
If you are single and have yearly income that tops $125,000 (or $250,000 as a joint filer) you aren’t eligible.
If you’re in the military and stationed overseas you can take advantage of the tax credit until June 30, 2011.
According to the National Association of Realtors, a little less than half of the home sales that occurred this year (through August) were eligible for the first time home buyer credit.
If you are hoping to make use of the tax credit keep the April 30 deadline in mind, especially if you are attempting to purchase a short sale home or foreclosure because sometimes it takes weeks (many weeks!) for the seller (i.e. the bank) to respond to your offer.
First time home buyers:
* Remember that you must be under contract by April 30 and close by June 30 to qualify. If you are purchasing a home that is not a short sale or foreclosure you could literally make an offer to buy the house the morning of April 30, and be under contract that evening and qualify for credit. Although I wouldn’t necessarily recommend cutting it that close!
* If you have your eye on a house that is bank owned (foreclosure) or a short sale (where the owner owes more on their mortgage than the house is worth and must rely on the bank to accept less than what is owed) do not cut it close to the deadline! On a short sale especially the bank may take weeks to approve the contract or even get back to you on your offer.
* Some great resources for first time home buyers in Colorado include the Colorado Housing Counseling Coalition and the Colorado Housing and Finance Authority which has some helpful loan programs for first time home buyers.
Current home owners:
* Yes, it’s true, practically everybody gets a tax credit now. If you have owned (and lived in) your home for at least 5 consecutive years out of the last 8 you may be eligible for a $6,500 tax credit which could be very helpful for home owners who are looking to move up in what is still a relatively soft market.
* Note that the rules apply to you the buyer, NOT the seller of the house you are looking to buy. Someone asked me yesterday if their “house” still qualified because they only lived there 3 years. It’s not the house, it’s the buyer. You can buy a brand new house and still qualify for the credit as long as you have owned and lived in your current residence for at least 5 consecutive years out of the last 8.
* Your deadline is also April 30 to be under contract and June 30 to close. Don’t procrastinate and cut it too close to the deadline. After all $6,500 should cover your closing costs.
Additional rules:
* If you live in the home for at least 3 years after you purchase it you do not have to pay the tax credit back, it is truly a credit and not just a loan.
* You can actually claim the credit on your 2009 taxes if you file an amended return.
* More than 80% of home buyers start their search on the Internet. You can search the MLS IDX for your next home here (no registration required!):
Broomfield homes for sale under $200,000.
Westminster homes for sale under $200,000
Thornton homes for sale under $200,000
Northglenn homes for sale under $200,000
I’m so happy you took the time to read one of my blog posts! Click here to search for a home for sale in the Broomfield, Westminster, Thornton or Northglenn, CO area. OR click here to find out what your current home is worth. As always, no registration is required, and any information you give me will NEVER be used to spam you or sold to someone else. EVER!
If you have any questions about buying or selling a home in the north metro Denver area don’t hesitate to contact me at 303.887.1883 or beth@bethskinner.com – and yes I actually return phone calls and emails! I am an extraordinary Realtor who strives to constantly go above and beyond what you might expect from your real estate professional and I love to surprise my clients with phenomenal results.
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