As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. As always, we advise you to contact a tax professional or the Internal Revenue Service at 800-829-1040www.irs.govwith specific questions and eligibility assurances.
Opening new doors of opporunity, first-time home buyers tax incentives were included in the 2009 stimulus plan, and expanded in the 2010 extension. These incentives are made to reach out to help new buyers to the market take advantage of the low credit time and help the economic recovery. Those who purchase homes between November 7, 2009 and April 30, 2010 are eligible to receive a tax credit of up to $8,000 on a new home purchase. (
If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.).
Timing: 1st time homebuyers must purchase the home between November 7, 2009 and April 30, 2010 in order to be eligible to receive the tax credit. Under the Extended Home Buyer Tax Credit, as long as a written, binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. Also, armed services members, as well as intelligence service and foreign service personnel, who are on active duty and out of the U.S. for 90 days during any part of 2009, get an additional year to buy their homes, to May 1, 2011.
Price: Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Type: This Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
Homeownership: To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Buyer Income: Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit. These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
Incentives for Homeownership Expanded Beyond First-Timers
While you may have heard of recent tax credit incentives for first time homebuyers in the real estate market, last month launched a new less publicized initiative for current homeowners. To continue to spur the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that grants up to $6,500 to current home owners purchasing a new home between November 7, 2009 and April 30, 2010.
This expansion provides a fantastic financial incentive for current home owners looking to downsize or upsize their home to meet changing lifestyle needs. To be eligible, homebuyers must purchase a new home between November 7, 2009 and April 30, 2010, have owned and occupied a principal residence for five consecutive years within the last eight; purchase a new home for under $800,000 and meet income guidelines. Here are the specifics:
Timing: Home owners must purchase the home between November 7, 2009 and April 30, 2010. Under the Extended Home Buyer Tax Credit, as long as a written, binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Price: Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less. The ceiling is fixed and buyers purchasing a home purchased for $800,001 would not qualify for any credit.
Type: The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
Homeownership: Buyers interested in obtaining this expanded credit must have owned and resided in a principal residence for five consecutive years within the last eight. For example, say John bought a home in 2000 and lived there until 2007 when he moved out. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.
Buyer Income: Under the Extended Home Buyer Tax Credit, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit. The credit begins to decrease after those income limits, and cap at earnings over $145,000 for singles and over $245,000 for couples.
The beauty of this incentive is that the credit does not need to be repaid, if the buyer occupies the home for three years or more. The potential cash refund can expand your buying dollar, make updating the home to suit your needs possible and help with moving and relocation expenses.
For information on this tax credit, to review the specifics of the first time homebuyer $8,000 tax credit, the energy efficiency tax incentives and market information, please visit our website, www.BerkshireRealtors.com. This consumer website from the Berkshire County Board of Realtors® also offers a new beta advanced search of MLS listing data which allows you to check the local market, search by property characteristics or by map, communicate with listing agents, save favorite properties and view the up-to-the-minute open house schedule.
As always, we advise you to contact a tax professional or the Internal Revenue Service at 800-829-1040 www.irs.gov with specific questions and eligibility assurances.
Clarification: Tax Credit Used as Down Payment
Advise Buyers to Consult with Banker
We've received questions about the $8,000 tax credit being used as a buyer's down payment, and asked Steve Ryan, MAR General Counsel to respond. Steve said, "Under the new rule the tax credit can be used for FHA loans for both the down payment and for the closing costs but only AFTER the buyer has come up with the first 3.5% themselves. The 3.5 can come from their savings or from a gift from relatives.
The 8k can be used to buy down the interest rate or to decrease the principal of the loan but, again, the first 3.5% has to be their $ not the tax credit. The reason the feds changed the original plan was due to concerns about buyer getting homes with none of their own money being involved and thus having no stake or 'skin in the game' as they keep saying.
Alternatively, MHFA already has a no $ down program for certain buyers and 3% down program for all buyers & those may actually be the better programs here in MA." Mass Housing Program Details
PLEASE NOTE: Tax credit is available on ALL 1st time homebuyer new purchases within the loan/income limits, not just FHA mortgages. The ability to use the tax credit for a downpayment is limited to FHA borrowers, but not all Berkshire lenders are participating in this program - encourage your buyers to ASK. More information below.
Tax Credit for Armed Service Members
Extended to May 1, 2011
Armed services members, as well as intelligence service and foreign service personnel, who are on active duty and out of the U.S. for 90 days during any part of 2009, get an additional year to buy their homes, to May 1, 2011. Another benefit is a waiver on the time of occupancy of the home purchased with the tax credit. Homebuyers who purchase their home using the tax credit must use that home as a principal residence for a period of no fewer than three years, or must forfeit the entire credit. Military, intelligence and foreign service members do not have to repay the credit if they have to sell their home after fewer than three years occupancy due to official business.
Berkshire County Board of Realtors® -
99 West Street, Suite 200 Pittsfield, MA 01201-5845 413-442-8049 Sandra
J. Carroll, Chief Executive Officer - Sue
O'Brien, Member Services Administrator- Stacy Buhl, Office Clerk
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