First Time Homebuyer Tax Credit
The First Time Homebuyer Tax Credit has been extended - More Help for Homebuyers, Including Military Families is on the way. Read all the details below:
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What does this mean for you and how can you take advantage when applying for a home mortgage:
- It extends the $8,000 homebuyer tax credit to first time homebuyers with a binding contract before April 30, 2010, allowing 60 days to close. (Currently, it will expire November 30, 2009.).
- As soon as the President signs this bill into law, it will expand the first time homebuyer tax credit to more families -- phasing out for individuals with income above $125,000 and for joint filers with income about $225,000 (the current law credit phases out for individuals with income starting at $75,000 and for joint filers with income starting at $150,000) and make a $6,500 credit available to homebuyers who have been in their current residence for five or more consecutive years out of the last eight years.
- The credit is available for the purchase of principal residences with a purchase price of up to $800,000.
- To help service members take full advantage of homebuyer incentives in the Recovery Act, the bill:
o Ensures that certain payments under the Defense Housing Assistance Program (HAP) to assist military personnel selling a home that has declined in value are exempt from tax;
o Ensures service members will not have to repay the first time homebuyer tax credit if they are ordered to deploy to a different location and, as a result, forced to sell their home within three years; and
o Extends for one year, to April 31, 2011, the deadline for taking advantage the first time homebuyer credit for *qualifying service members, so that certain service members stationed overseas can take advantage of the tax credit when they return. (*Qualifying service members: personnel serving outside the United States for at least 90 days in 2009 or 2010 one additional year to qualify for the credit.).
11/6/2009 NEWS:
The House yesterday gave its approval to legislation that would extend the popular first time homebuyer tax credit through April and expand the program to other home buyers.
Following yesterday's approval by the Senate, which voted 98-0 in favor, the House voted 403-12 in favor. The bill, part of a larger piece of legislation that extends unemployment benefits, goes to President Obama, who is expected to sign it into law.
The Mortgage Bankers Association, which lobbied hard for passage of the bill, commended Congress on its action.
"At a time when we are finally starting to see some signs of life in the housing and mortgage markets, extending and expanding the first time homebuyer tax credit is a critical step to keeping the momentum", said MBA Chairman Robert Story Jr, CMB.
"This has been one of MBA's top single-family legislative priorities, and we are very glad to see that policymakers on both sides of the aisle see the importance of this measure."
The bill extends the current $8,000 first time home buyer tax credit, which was set to expire Nov. 30, through April 30, 2010. It also includes a tax credit of up to $6,500 for qualified move-up buyers and increases borrower income limits for both credits to $125,000 for individuals and $225,000 for couples. Home buyers will qualify for the full credit as long as they have entered a binding contract by April 30, 2010 and they close the transaction within 60 days. The tax credit is limited to homes with a purchase price of $800,000 and below. The bill also includes anti-fraud language that gives the IRS the authority to provide greater oversight during processing of the return.
"Taking action to help the economic turnaround of our country is our most urgent challenge", House Speaker Nancy Pelosi, D-Calif., said on the House floor just before the vote. MBA President and CEO John Courson called extension and expansion of the tax credit is a "major legislative victory" for MBA and its single-family members. "It culminates months of MBA, along with some allied trade associations, working to educate policymakers to on the critical role the credit has played in stabilizing the housing and mortgage markets", he said.
"The existing credit for first-time home buyers has helped move a segment of potential home buyers off the sidelines and into their first homes", Story said. "By expanding it to qualified existing homeowners, we can help stimulate even more home purchases for qualified buyers. I also want to applaud measures in the bill that will help eliminate fraudulent use of the tax credit."
Additionally, the legislation waives the recapture provision for members of the armed forces who are called on extended duty. Members of the military and uniformed services, who are out of the country for at least 90 days, will also be eligible to use the tax credit upon their return through April 30, 2011.
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