Thinking of buying your first home? You might want to do it before April 30, 2010. In an effort to revitalize the housing market, the government has extended a tax credit for first-time homebuyers.
What It Is.
The credit provides 10% of the cost of the home (up to $8,000), and applies to people who buy a principal home before the April deadline. You'd also qualify if you have a binding sales agreement dated on or before April 30, 2010 with a closing scheduled before June 30, 2010.
The credit is good toward homes costing less than $800,000. (With the crash in the housing market, you'll have an even bigger selection today than in the past.) There's an income limit of $125,000 for single taxpayers and $225,000 for married couples filing joint returns. You have to be over 18, and neither you nor your spouse can have owned a primary residence in the previous three years. Also, as a buyer, you can't be claimed as a dependent on anyone else's tax return. For more information on the Federal Housing Tax Credit, click here.
How It Works.
If you're eligible, you'll receive a higher tax refund come tax time; if you have a tax bill, then the up-to-$8,000 credit will go toward paying that off, first. If you owe less than the amount of the housing tax credit, $8,000 in federal taxes, then you'll receive a refund for the difference.
No Funny Business.
If you receive the housing tax credit but then fail to live in your new house for at least three years, you will have to repay the credit.
For further restrictions and to learn about the $6,500 credit available for current homeowners looking to change addresses, visit this information page.