Two tax credits may help you buy a house

By: Steve Welker | Morganton News Herald
Published: November 30, 2009

Morganton, NC --

As autumn rushed in during October, first-time home buyers hurried into the real-estate market.
They hoped to capitalize on a federal tax-credit of up to $8,000.
Bobbie McCombs, president of the Burke County Board of Realtors, and her colleagues believe some potential buyers missed an opportunity because they didn't read the fine print.
A lot of people heard of the first-time homebuyer tax credit, she explained, but thought it was only for someone who hadn't owned a home before. It's for someone who hasn't owned a home in the past three years, McCombs said. Also, she continued, "The $8,000 is a true tax credit. If you don't owe enough to use the full $8,000 credit" – the credit is based on both the buyer's income and the home's price — "you get a check back."
There still is an opportunity for people to take advantage of the federal stimulus program. Though it was due to expire on Nov, 30,
The first-time home buyer's credit was due to expire Nov. 6, but the U.S. Congress passed an Extended Home Buyer Tax Credit that goes into 2010.
Congress also approved a new tax credit for people who have lived in one home for at least five consecutive years out of the past eight years and who buy a new primary residence for $800,000 or less. An individual buyer's income must be no more than $125,000; the maximum income for joint tax filers is $225,000. The maximum tax credit is $6,500.
Many details are on the Internal Revenue Service's Web site at www.irs.gov.
The National Association of Realtors also has a helpful question-and-answer page at www.Realtor.org. Here are some highlights:
n Who qualifies for the extended credit?
First-time home buyers who purchase homes between Nov. 7, 2009, and April 30, 2010. 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.
Current home owners purchasing a home between Nov. 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.
n What properties are eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences including: single-family homes, condos, townhomes and co-ops.
n How much is available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
n How is a buyer's tax credit determined?
Each home buyer's tax credit is determined by two factors: the home's price and the buyer's income. The home's purchase price must be $800,000 or less. Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit. Note: The income limits have changed from the 2009 First-Time Home Buyer Tax Credit program.
If the buyer's income exceeds the limit, can he, she or they still get a credit?
Yes, some buyers may still be eligible for the credit. The credit decreases for buyers who earn $125,000-$145,000 for single buyers and $225,000-$245,000 for home buyers filing jointly. Home buyers earning more than $145,000 for singles and $245,000 for couples are not eligible.
n What's the deadline?
To qualify for the Extended Home Buyer Tax Credit, a written, binding contract to purchase must be in effect on or before April 30, 2010. The purchaser has until July 1, 2010, to close.
Does the tax credit need to be repaid?
No. The buyer does not need to repay the tax credit if he, she or they occupy the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.

Two tax credits may help you buy a house

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