One of the tools the federal government is utilizing to stimulate the housing market is through a federal tax credit for home Buyers, which was extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.
Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order. Check with your tax advisor for more details.
There are several other tools the government has implemented to help the housing market and make home ownership more affordable, such as:
- lower interest rates
- liberalized FHA financing requirements (i.e. minimum 3.5% down payment, etc.)
- increased conforming loan limits ($729,250 in our area, up from $417,000)