Financing a Home

Senate Passes Unemployment Extension, Home Buyer Tax Break

The Senate voted to extend the $8,000 first-time home buyer tax credit. Additionally, the new bill also includes a $6,500 credit for existing homeowners who have been in their current residence for at least five years.

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NAR summary and comparison

Summary:

The Refurbished Home Buyer Tax Credit Details

Current

• Existing $8,000 tax credit is through November 30, 2010. (10% of sales price, up to $8,000 credit.)
• Original tax credit has $8K credit had income limits of $75,000 for singles and $150,000 for married couples filing jointly.

New

• Extension of the existing $8,000 tax credit is through May 1, 2010. (10% of sales price, up to $8,000 credit.)
• To claim the credit you must enter into a valid written contract by May 1, 2010. Must close before July 1^st 2010.
• NEW for long-time residents of same principal residence. 10% of sales price, up to $6,500 credit. Basically a credit for current homeowners that have at least 5 consecutive years in the same home. (This is over simplified version)
• Max sales price of $800,000, Applies to primary residences only.

Military

• Armed Forces – deployed on duty outside the United States. Extensions to May 1, 2011 and must settle before July 1. 2011). Deployment must be for at least 90 days between Dec 31, 2008 – May 1, 2010.

Fraud

• As with every gift, there are those that want to take more than their fair share. So the government has added some fraud prevention measures.
• Must be at least 18 years old to apply for the credit
• Properly executed settlement statement used at closing of home must be included with the tax return. Completed Form 5405.