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First-Time Homebuyer Tax Credit Extension

Those who were feeling the pressure to buy a home immediately in order to take advantage of the first-time homebuyer tax credit can relax a bit. On November 6, President Obama signed a bill that, among other things, extended the tax credit available for first-time homebuyers. Originally due to expire at the end of this month, the tax credit now doesn’t expire until next June, provided that the homebuyer signs a binding contract by April 2010 that states a June closing.  

In addition to extending the expiration date of the tax credit, the bill added a provision that allows a $6,500 tax credit to home owners who have lived in their current residence for at least five years and plan to buy a new home. 

There are a few details to keep in mind about the tax credit:

• The credit isn’t really just for first-time homebuyers. Anyone who hasn’t owned a home for at least three years is considered a first-time buyer.
• The credit is only available for the home in which you plan to live. It can’t be claimed for the purchase of a vacation or rental property.
• Although $8,000 is the number we’ve all heard in regard to this bill, the bill actually states that homebuyers are eligible for a tax credit equal to 10% of the price of the purchased home, up to $8,000. If you happen to buy a $70,000 home, you’d only receive a $7,000 tax credit.
• If you sell your home or move out within three years, you’ll be required to pay back the credited amount.

Remember that any home purchase requires a detailed appraisal, and to ensure an accurate estimate of the home value, you should work with an appraiser who is familiar with the housing market in the area where you found your dream home.

By: Present Value

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