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November 6th, 2009 8:17 AM by David W. Welch
The extension and expansion of the home buyer tax credit is on it's way to the White House for the President's signature as part of a broad financial package that will extend unemployment benefits. Notice that I did not call it a first time home buyer credit, because it is more than that with the expansion. First time home buyers (those who have not owned a home in the past three years) still qualify for up to $8,000. The income restrictions have been raised significantly to $125,000 for singles and $225,000 for joint tax filers. However a limit of $800,000 has been placed on the value of the home purchased. So, if you have been waiting to cash in that trust fund to purchase your first $1 million McMansion try scaling back to $800k to qualify for the credit. This latest extension of the credit begins December 1, 2009 and is good for closings through June 30, 2010. You must be under a binding contract by April 30, 2010 however to qualify for the credit.
Repeat purchasers get a little less back from Uncle Sam. If you have owned and used a home as your principal residence for five consecutive years out of the last eight, you can qualify for a credit of up to $6,500. The same income and home price restrictions apply. It is also important to note that the credit is only for primary residences. Repeat purchasers cannot use the credit for a second home. I cannot understand why this was important to law makers. Frankly, if you look at the states that need home buyers the most, they are also the states that probably have the greatest number of second home buyers (Florida, Nevada and California). There are other provisions in this legislation to help deter fraud, but I have not heard specifically what they are. Personally, I see the April 30 to June 30 period as having a tremendous potential for fraud as buyers and sellers once again come under pressure of the deadline.
On a completely unrelated subject; my House Hunters episode is tentatively scheduled to air November 12, 2009 at 9:00pm. Check you local listings.
Orlando Real Estate, David Welch Real Estate Optimist