Congress has extended and expanded the homebuyer tax credit. This tax credit is for first-time homebuyers and existing homeowners!
As most everyone knows, first-time home Buyers receive a tax credit of $8,000. The definition of a first-time home Buyer is someone who has not had an interest in a principal residence for 3 years prior to the purchase.
But, there is also a tax credit repeat Buyers; someone who is not a first-time home Buyer. The tax credit for the repeat Buyer is $6,500. A current homeowner who has lived 5 consecutive years out of the last 8 in their current home is eligible.
There is no requirement that the repeat Buyer sell their current home or that the new home has to be of a higher value than the current home.
To qualify for the tax credit, Buyers must have a written, signed binding contract in effect by April 30, 2010 and close on the home by June 30, 2010.
Tax credit eligibility is subject to income limits of $125,000 for single Buyers and $225,000 for couples. In addition, the sale price of the home being purchased can not exceed $800,000.
There is no obligation to pay back this credit. If the home ceases to be your principal residence within 36 months from the date of purchase, then the full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
At tax filing time, you must attach documentation of purchase to the tax return.
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