Good News for Home Buyers in South Riding and all of Northern Virginia!

On Friday, November 6th, 2009 the Worker, Homeownership, and Business Assistance Act of 2009 was signed into law, extending the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence, which was set to expire on November 30, 2009. The tax credit’s income limits were increased.

The law also authorized a new tax credit of up to $6,500 for qualified existing home owners purchasing a principal residence after November 6, 2009.

The tax credits apply to qualified purchases until April 30, 2010, (or purchased closed by June 30, 2010 with a binding sales contract signed by April 30, 2010).

 

The IRS reported that more than 1.4 million taxpayers have benefited from the tax credit, and the expanded tax credit is anticipated to stimulate even more home purchases for qualified buyers.

Summary of Tax Credits 

First-Time Home Buyer Tax Credit:

1. Home purchase for primary residence must occur on or after January 1, 2009 and on or before April 30, 2010

· also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010

2. “First-time home buyer” is a buyer who has not owned a principal residence during the 3-year period prior to purchase

· For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse

3. Tax credit is equal to 10% of the home’s purchase price up to a maximum of $8,000.

· Purchases of homes priced at or above $800,000 are not eligible for the tax credit

4. Income limits apply

a. on or after January 1, 2009 and on or before November 6, 2009

i. $75,000 for single taxpayers

ii. $150,000 for married couples filing jointly

b. after November 6, 2009

i. $125,000 for single taxpayers

ii. $225,000 for married taxpayers filing a joint return

c. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than above stated income limits. Taxpayers with modified adjusted gross income of more than $145,000 (single) or $245,000 (married) will not be eligible for a tax credit, and taxpayers with MAGIs between these amounts will be eligible for a reduced credit.

 

Move-Up/Repeat Home Buyer Tax Credit:

1. Home purchase for primary residence must occur on or after November 6, 2009 and on or before April 30, 2010

· also allows home sales occurring by June 30, 2010 to qualify, provided they are due to a binding sales contract in force on or before April 30, 2010

2. “Qualified move-up home buyer (“long-time resident”)” is a home owner who has owned and resided in a home for at least 5 consecutive years of the 8 years prior to the purchase date.

· For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse

3. Tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced at or above $800,000 are not eligible for the tax credit.

4. Income limits are:

· $125,000 for single taxpayers

· $225,000 for married taxpayers filing a joint return

· The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) of more than above stated income limits. Taxpayers with modified adjusted gross income of more than $145,000 (single) or $245,000 (married) will not be eligible for a tax credit, and taxpayers with MAGIs between these amounts will be eligible for a reduced credit.

 Click Below for sections that discuss the details of the First-Time Home Buyer Tax Credit and the Move-Up/Repeat Home Buyer Tax Credit:

 

Frequently Asked Questions About the First-Time Home Buyer Tax Credit

 

Frequently Asked Questions About the Move-Up/Repeat Home Buyer Tax Credit

 

This information provided is not intended to be tax advice, and it should not be used in such a manner. One should consult a tax adviser for further information.