The Federal tax Credit Program has recently spawned much activity in the real estate market. Sales spiked in November 2009 as buyers rushed to meet the deadline for the incentive and many economists are predicting another spike in sales as the summer 2010 deadline approaches. However, many buyers have tons of questions regarding this incentive programs. I must admit that even those of us in the business have had trouble understanding these programs.
Please keep in mind that an excellent source for these answers will be with your tax attorney or your accountant. Regardless the following are some bullet points which should clarify some of questions:
1. The tax credit is for the amount of $8000.00 and unlike the previous incentive this credit does not have to be paid back.
2. In order to qualify for the credit the purchase must be made for a primary residence.
3. The purchaser which is applying for the tax credit must be a first time home buyer; this is defined as someone who has not bought a home in the past three years.
4. The purchase must close between January 1, 2010 to April 30, 2010.
5. Second home buyers may qualify for the $6500 tax credit.
6. To qualify for this 6500 credit the buyer must have owned a home for 5 consecutive years of the last 8 years.
7. The purchase must be made after November 6, 2009; for the $6500 credit.
8. To qualify for the 6500 credit the buyer must make no more than $125K annually as a single person and $250K for couples.
9. Both tax credits may be claimed on 2009 taxes.
10. If the property is rented or sold within the first 3 years the tax credit of $8000 must be re-paid.
I hope that this clears up some of the recent confusion surrounding the Federal Tax Credit.