The new first-time homebuyer tax credit is getting a lot of press, and we can expect things to really heat up after the first of the year, as those who have taken a break for the holidays jump back into the market.
It's also a good time to clarify who is eligible for the credit, as well as some facts about the tax credit that people may not be familiar with.
THE BASICS:
Who is a first-time homebuyer: Anyone who has not owned a home for the past three years. If someone owned a home ten years ago, sold it four years ago, and has been renting since then, that person is considered a first-time homebuyer.
How much is the credit: The credit is 10% of the purchase price of the home, up to a maximum of $8000. If you purchase a home for $50,000, you will only receive $5,000.
How long is the first-time homebuyer credit in effect? The new home must be purchased (under contract) by April 30, 2010 and the closing must take place by June 30, 2010 (before 7/1/2010).
Are there income restrictions: Yes, in general, married people with a modified gross adjusted income of $225,000 will receive the entire credit (with a phase-out for higher incomes); single people with a modified gross adjusted income of $125,000 will receive the entire credit (again, with a phase-out for higher incomes).
What types of homes can be purchased: Homes that will be used as principle residences only qualify, including single-family homes, condos, multi-family homes that will be owner-occupied, mobile homes (with and without land ownership). The home must be in the United States.
For a detailed explanation of these and other points, read the IRS guidelines.
OTHER CONSIDERATIONS:
There are some fine points that people may not be aware of. For example:
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If you are purchasing a multi-family and plan to live in it, you may only qualify for 10% of your portion of the building. For example, if a 3-family home is purchased for $240,000 and if your unit is worth exactly one-third of the building, you will receive the full credit (10% of 80,000). If you purchase the building for $210,000, you will only receive $7,000.
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If you owned a house outside of the U.S., you would be considered a first-time homebuyer if you purchased a home in the U.S.
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If you purchase a home from a spouse, parent, child, grandparent, or grandchild, you are not eligible for the tax credit.
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If a person buys a newly-constructed home, the purchase date is the date that the buyer occupies the home.
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If a person owns a rental property but has not lived in the property for three years, that person is eligible for the tax credit if he/she buys a new principle residence.
For special situations, read the IRS frequently-asked questions.
If you have other questions that you would like to ask, please contact me.
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Peggy Chirico, REALTOR®
Serving the Greater Hartford Area
Prudential CT Realty
peggychirico@gmail.com
860-748-8900
If you are buying or selling a home in Hartford County or Tolland County, please call me, email me, or visit my website. I would be happy to help you with your home search or provide a market analysis for your home.
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