Last Friday (November 6), President Obama signed legislation into law that both extended the existing $8,000 first time home buyer tax credit and added a new tax credit for some existing home buyers.
Here is a summary of the extended and expanded tax credits:
First time buyer tax credit:
This was extended to May 1, 2010: A tax credit of 10% of the purchase price of a home, up to $8,000, may be claimed by first-time buyers for the purchase of a primary residence. As long as you are under a binding purchase contract by April 30, 2010 – and close on the transaction before July 1, you can probably claim the credit.
A first-time buyer is defined as someone who has not owned a home in the past three years.
Income limits were increased to $125,000 for singles, $225,000 for married couples filing jointly.
The purchase price of the home can not exceed $800,000.
Existing home owner credit:
If you have lived in your home for five consecutive years out of the last eight years and are buying another primary residence, you may qualify for a tax credit of 10% of the purchase price, up to a maximum of $6,500.
The May 1 / July first time limits apply to the existing buyer credit as well.
The $125,000 / $225,000 income limits and $800,000 max purchase price limits also apply.
The existing home owner credit became effective “on the date of enactment” – November 6.
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