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$8,000 Tax Credit update 11/2/2009
Although various proposals to extend and expand the $8,000 tax credit
have circulated in Congress for weeks, Senate lawmakers finally
reached a deal in recent days. Under the terms of the agreement, the
deadline for first-time home buyers to claim the $8,000 credit would be
pushed back to April 30, 2010. But the term "deadline" doesn't mean
the same thing as it does in the current credit. The Senate agreement
stipulates that buyers must have a sales contract on a house by April 30
to be eligible, but it gives them an additional 60 days to close the
purchase.
Perhaps the most significant change is that current homeowners would
become eligible for the tax perk as well. The current credit prevents
home buyers who have owned a primary residence within the past three
years from claiming the credit. The agreement, however, would allow
current homeowners to claim up to $6,500 as long as the property they
are vacating has been their primary residence for at least five years.
The agreement also enables more affluent Americans to claim the tax
credit. Senators moved to increase its annual income limits from
$75,000 to $125,000 for single buyers and from $150,000 to $225,000
for married couples. These limits apply to both first-time and move-up
buyers, although neither can purchase a home for more than $800,000
and still get the credit. Anyone taking the credit on a 2010 purchase can
claim it on his or her 2009 tax return. And as long as home buyers live in
the property they purchased via the credit for three years or more, the
tax credit does not have to be repaid.
Keep in mind this is not final legislation, but the Obama administration is
supporting these changes
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