Current and Future Homeowners Question the Homebuyer Tax Credit Extension

By: Salina Green, Outreach Coordinator, NHS of Baltimore

As soon as Congress decided to expand the $8,000 tax credit for first-time homebuyer (until April 30th, 2010), many people began questioning their eligibility. Current homeowners are seeking answers concerning the new tax credit law passed last week, which will put more money into their pockets. This new legislation allows current homeowners to take advantage of a tax credit up to $6,500 if they purchase a new home. All sales must be completed and closed out by June 30, 2010. Both the first-time and current homeowners’ tax credits come with strict stipulations that must be followed.

The new rules in place come after the IRS paid out an enormous sum of money because of fraudulent claims. Thousands of ineligible people received funds. Under the new law, a buyer must prove they purchased a home and provide prove of age; 18 is the minimum. Some of the new restrictions are as follows:

Anyone who purchases a home for more than $800,000 will not qualify for either tax credit.

To be eligible for full credit after November 6th, your income must fall below $125,000 for single filers and $225,000 for joint filers.The credit decreases in value for people making more than those amounts, phasing out completely after $145,000 for singles and $245,000 for couples.

Settlement statements must be attached to your tax returns as proof of purchase.

These are just some of the benefits established by the new legislation. It was created to allow people more time to gather the revenue necessary to purchase their first homes. Recent retirees can also benefit by downsizing to a cheaper home and still obtain a nice tax credit. There are special concessions in place for military member at home and abroad, who desire to participate in the programs.