By John R. Rapasky
Now is a great time to buy a home. Interest rates are at historic lows and home prices are the lowest they have been in years. Further, there is a tax credit for purchasing a home. This blog discusses the homebuyer tax credit.
Under this law, passed on November 6, 2009, an eligible taxpayer must buy, or enter into a contract to buy, a principal residence on or before April 30, 2010 and close on the home by September 30, 2010 (this was recently extended as the former date for closing was June 30th).
For the first time, long-time homeowners who purchase a replacement principal residence may claim a tax credit of up to $6,500. They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. The law does not require the sale of your current principal residence to qualify for the credit.
Also, individuals with higher incomes can now qualify for the credit. The credit phases out for individual taxpayers with modified adjusted gross income between $125,000 and $145,000 or between $225,000 and $245,000 for joint filers. However, no credit is available if the purchase price of the home exceeds $800,000.
The first-time homebuyer tax credit has also been extended. The credit applies to purchases of primary residences. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000. You can qualify for the credit if you did not own a primary residence during the three years prior to the date of the purchase of the home.
You can obtain more details regarding the credit at www.irs.gov. If you have specific questions, look for the questions and answers section regarding the credit on the IRS website.
John Rapasky is the President of the Counsel Mortgage Group, LLC. You can learn about them at www.counselmortgage.com. Copyright © 2009 Counsel Mortgage Group®, LLC
MB# 0909580 NMLS# 178927 AZ LO# 0911590 NMLS LO# 179539