November 8,2009

New Tax Credit Rules

This new tax credit extends and expands the credit set to expire on November 30th, 2009.  The new legislation is effective November 7, 2009 and expires April 30, 2010.
Highlights are as follows:

• The first time homebuyer tax credit remains at: $8000. 
• First time buyer definition of eligibility:  must not have owned a principal residence for 3 years prior to purchase
• Repeat homeowner tax credit:  $6500
• Current homeowner definition of eligibility:  Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years
• Binding contract rule:  purchaser will have until July 1, 2010 to close as long as they have a written, binding contract in effect on April 30, 2010 
• Limitation on cost of home:  it was zero, now it is $800,000 
• Income limitations have gone up as well:  single, from $75,000 to $125,000 and married, from $150,000 to $225,000. 
• Purchase by a dependant:  went from n/a to ineligible 
• Anti-fraud rule:  went from none to must attach documentation of purchase to tax return

 Now is the time to buy AND sell!