April 19, 2010
April 17, 2010
There's still time! But you have to act fast... Search Homes Now. The $8,000 first-time home buyer tax credit has been extended into 2010 and additions have been added. There's a $6,500 tax credit existing home owners! This is great news and a fabulous incentive if you're considering purchasing a home or waiting for a slam dunk reason to buy a home in the Cleveland, Ohio area. If you have any questions, please email us or call us at 440-781-8737. Time is of the essence. Below are the details of the new home buyer tax credit program for new and existing home owners.
- First-time home buyers in Ohio will continue to get the $8,000 tax credit through April 30, 2010. Same definition as 2009 law. Tax credit for "move up" purchasers will be up to $6,500.
- Must have used previous home as a principal residence for 5 our of the 8 previous years. This is a new $6,500 addition to the tax credit for Ohio home owners looking to buy another home, (move up)
- Income limits increased and are the same for first-time and "move up" purchasers. $125,000 for single filers/$225,000 for joint filers. Limitation on eligible home prices has been increased to $800,000.
- Time Frame: December 1, 2009 to April 30,2010 plus a 60 day extension if binding contract is in place by April 30, 2010.
- As in the previous 2009 program, the tax credit applies only on the purchase of an individual's primary residence. No second homes or investment properties.
FAQs about the home buyer tax credit:
Question: What is the definition of a first-time home buyer?
Answer: Anyone who has not owned a home in the three years leading up to the current purchase.
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a
new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment. There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a first-time home buyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phaseout range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I have found a home with a nonnegotiable price of $825,000. Will I be able to use any of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago year and have been renting since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight what he did since 3 years doesn't impact eligibility.
Question: I am an eligible first-time home buyer. I entered into a contract to purchase on
November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30 (or July 1, 2010 worst case), the purchaser will be eligible for the credit.
First time home buyer and existing home owner tax credit information brought to you by RE/MAX real estate group. Contact us for more information or to get started on the home buying or selling process to cash in on this great tax credit/incentive.
Contact our RE/MAX Team of agents for all Brunswick, Ohio real estate and surrounding areas of Cleveland/Akron.