Tax Credit Dealine Extended

Long-term homeowners now qualify as well!!

Now is the time for first-time home buyers to take advantage of the tax credit that is offered to them when they buy a house this year. Below is some important information that will help you understand this tax credit and what it could mean to you.

Who is eligible-First-time homebuyers who purchase a home as their primary residence and close on or before June 30, 2010 are eligible. (Must have entered into a binding contract by April 30, 2010). If you (and spouse, if married) have not owned your primary residence for a 3-year period before purchase, and you have never used the DC first-time homebuyer credit, you also qualify as a first-time homebuyer. Now included in the tax credit are those who have owned their home for at least a 5 year consecutive period and replace their home with a primary principal residence. These homeowners can get a credit of $6500. Income limits have also been adjusted. Please see the link below for more detailed information.

How does it work-The tax credit will directly reduce the amount of taxes you owe. You will be able to deduct the amount of the tax credit from what you owe on your tax return. For example, if you owe $2000 on your taxes, but get an $8000 tax credit, you could get a $6000 refund instead! For qualifying purchases in 2010, you have the option of claiming your credit on the 2009 or 2010 tax return.

How much is the tax credit-The tax credit is equivalent to 10% of the purchase price of the home OR up to $8000. If you buy a $40,000 home, the tax credit would be $4000 or 10% of purchase price. If you buy a $110,000 home, the tax credit would be $8000. The tax credit does vary a bit depending on if you file as an individual or joint. and does have some income limitations. ($75,000 for individual or $150,000 for joint). Check with your accountant or tax attorney if you have questions.

Do I have to pay the credit back-No. There is no repayment policy for this tax credit. However, if you sell your home within 3 years of purchase, the entire amount of the credit is recaptured, that is, the government takes it back.

For complete information on how you may be affected contact a tax consultant.

Also try the following link for information from the IRS:

www.irs.gov/newsroom/article/0,,id=204671,00.html?portlet=7