How to understand the Federal Housing Tax Credit Extension

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By guerrahih
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Tax Credit

All those potential first time home buyers who were afraid that they were not going to make the deadline for the first time home buyer tax credit can rejoice. The first time home buyer credit has been extended and expanded. President Obama signed the legislation November 6, 2009 as a part to stimulate the U.S. Housing market. Here are the details.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Computer
Realtor
Loan Officer
CPA

Step 1

Who qualifies for the Federal Housing Tax Credit?
First time homebuyers who buy a house (condo, townhouse, etc) between November 7, 2009 and April 30,2010. Current homeowners who buy a house between November 7, 2009 and April 30, 2010 who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight years.
Step 2

Who qualifies as a first time home buyer? A first time home buyer is a person who has not owned a property during the past 3 years. If you are a married couple, both of you will need to qualify as a first time home buyer.
Step 3

What kind of property can I buy in order to qualify for the tax credit? The tax credit can be applied to primary residences including single family homes (detached homes), condos, townhouses and co-ops.
Step 4

How much money will I get back? The maximum tax credit for first time home buyers is $8,000. The maximum tax credit for current homeowners is $6,500.
Step 5

Are there any other rules? The price of the property must be under $800,000 or less. The buyer(s) income must be under $225,000 for married couples and $125,000 for singles. You need to live in the property for at least 3 years, otherwise you will need to repay the tax credit in full.
Step 6

When do I have to go to closing (settlement)? You have until July 1, 2010 to close as long as you have a ratified binding contract to purchase by April 30,2010.
Step 7

What do I need to do to get started? First time home buyers need to look into getting pre-qualified for a first time home buyers loan. Maximize your benefits by searching for programs for first time home buyers. If you already own property and meet the above criteria you will need to determine if you need to sell your current home to buy the new home. Contact your local Realtor to get a market analysis to determine a possible sales price for your current property. Next you will need to speak with home mortgage lender to get pre-approved for a home loan. Start searching for properties. Close before the allotted time and apply for the tax credit when you file your taxes.