The extension, and expansion, of the $8,000 tax credit for first-time buyers is just about a done deal. The bill, H.R. 3548, now moves to President Obama's desk and is awaiting his signature. He has stated his intention of signing the bill into law, but remember... until he signs... it is NOT a law.
The Center is currently working on updating its Fact Sheet "Tax Incentives for First-Time Homebuyers" and will post the new fact sheet as soon as the bill is signed into law. For now, here's a brief overview of the contents of the bill:
- The $8,000 tax credit is available to first time buyers who are purchasing their primary residence.* The law defines a first-time buyer as someone who has not owned, or been included on title to, a property in the last three years.
- Buyers must sign a purchase agreement before May 1, 2010 and close on the property no later than July 1, 2010.
- If joint purchasers are not married, at least one of the purchasers must qualify as a first-time buyer. For married buyers, both must qualify as first-time buyers. With this extension, all buyers must be at least 18 years of age.
- There are income limits to claim the credit. The tax credit phases out for single taxpayers with adjusted gross income of $75,000 to $125,000. For married couples who file jointly, the phase-out is $150,000 to $225,000. (These are increases over previous tax credits).
- This tax credit can be claimed on either the 2009 or 2010 tax return. You must submit a copy of the signed HUD-1 statement with your tax return.
- NEW: There is also a $6,500 tax credit for some EXISTING homeowners who purchase another principal residence. However, they must have lived in their EXISTING principal residence for 5 consecutive years during the last 8 years.
- For either first-time or existing (sometimes called 'move-up' buyers - but the credit allows for 'downsizing' buyers too) the newly purchased property MUST be their principal residence.
- For members of the Armed Forces on duty outside of the U.S... the credit is extended an additional year (sign purchase agreement by May 1, 2011).
According to many reports... this may be the last time the credit will be extended... but homeowners, especially first-time buyers, should never base their home-buying decision on a tax credit. There are MANY other factors that play into whether home ownership is right for YOU or not. Before purchasing YOUR first home... take a Home Stretch class to learn what's involved, and speak with a non-profit Housing Counselor to see if you qualify for any down-payment assistance or other first-time buyer programs.
Remember - It's not a law until it has the President's signature on it!