Tax Credits explained

The extension and expansion of the homebuyers tax credit that passed Congress allows more first-time buyers to qualify and now includes credit for existing homeowners who buy a new home.

First-time buyers who missed the November 30 deadline for the previous program do not have to worry now. They can qualify under the new one. Both credits expire next spring. Buyers must have a contract on a home before May 1, 2010 and they have until June 30, 2010 to close in order to qualify.

The first-buyer credit remains 10 percent of the cost of the home or $8ooo, whichever is less. A first-time home buyer cannot have owned a home during the past three years. The credit for existing homeowners is 10 percent of the value of the new home or $6500, whichever is less. Existing homeowners must have owned and lived in their current home five out of the last eight years. In both cases, only single family principal residences qualify. No second homes or investment properties.

Other changes include the income limits. The new legislation raises the income limits for those claiming the credit to $125,000 a year for individuals and $225,000 for couples, up from $75,000 and $150,000 in the previous first-time buyer credit. The cost of the new home cannot exceed $800,000.

If the home is sold within three years original purchase, the entire amount of credit is recaptured upon sale. Recapture provision is waived for military personnel relocating due to orders. Credit extended for one year after expiration date for any military personnel that is serving outside United States for at least 90 days in either 2009 or 2010.

For more information, and to see if you qualify for one of these tax credit, call your local Real Estate agent. And if you are in the Dallas area, feel free to e mail or call me with questions.