There’s Still Time to Claim Up to an $8,000 Tax Credit on a Home Purchase

The federal homebuyer tax credit is set to expire at the end of April, but there’s still time for first-time homebuyers, and even existing homeowners, to take advantage of this substantial incentive to purchase a home.

First-time buyers may qualify for as much as an $8,000 credit, and buyers who already own a home can claim up to $6,500, providing they sign a binding purchase contract on or before April 30, 2010 and close by June 30, 2010.

Remember--these are tax credits, not simply tax deductions, so they reduce the amount of federal income tax owed dollar-for-dollar.

Special rules apply for U.S. military personnel, members of the Foreign Service and employees of the intelligence community, who have an additional year to buy and close if they are on a period of official extended duty.

The credits apply to the purchase of a principal residence. Buyers may qualify as long as their income doesn’t exceed $125,000 for single buyers or $225,000 for married couples. The tax credit is equal to 10 percent of the home’s purchase price, up to $8,000 for first-time buyers, or up to $6,500 for move-up or downsize buyers.

It’s important to remember that “first-time buyer” does not necessarily mean someone who has never owned a home. Under the law, a buyer is eligible if he has not owned a principal residence during the three-year period prior to purchase.

The tax credit, combined with historically low interest rates and an appealing inventory of available homes, has created a unique opportunity for buyers who have been waiting for the right time to jump into the market. But that opportunity will expire on April 30.

For more information about the tax credits, or to learn about available properties in your area, call our CENTURY 21 Adams & Barnes today at 626.358.1858 or 626.963.7621.

*This is not meant to be tax or legal advice. Consult a tax professional for details.