Federal Housing Tax Credit: New Rules, New Opportunities

President Obama has signed the extended Federal Housing Tax Credit into law. That's good news for buyers and sellers of residential real estate. Now, first time buyers get an extension on the $8,000 tax credit, and repeat buyers can get a $6,500 credit as well.

In order to take full advantage of the program, you have to follow the rules. John Fenech of Sunbelt Lending has prepared a checklist that buyers can follow to see if they qualify for the new credits. With John's permission, I'm passing these rules along to you.

$8,000 First Time Home Buyer Tax Credit

• This credit is for first time home buyers only. The IRS has defined first time buyers as someone who has not owned a principal residence during the three year period prior to the purchase of a home.
• The tax credit DOES NOT have to be repaid!
• The tax credit is equal to 10% of the home's purchase price up to a maximum of $8,000.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify for the credit.
• For homes purchased on or after January 1, 2009 and on or before November 6, 2009, the income limits are $75,000 for single taxpayers and $150,000 for married couples filing jointly.
• For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Now, here's the big news for many current homeowners ...

$6,500 Move-Up/Repeat Home Buyer Tax Credit

• To claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit DOES NOT have to be repaid.
• The tax credit is equal to 10% of the home's purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The tax credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

There it is. Please keep the dates in mind. From what I hear, Congress does not intend to extend this program again, so if you want to take advantage of this opportunity you need to act now. It really is a great time to buy!

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