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The $8,000 Tax Credit Has Been Extended

Posted by Wayne Long on Wednesday, December 16th, 2009 at 3:12pm.

The $8000 Tax Credit has been extended through June 2010. The buyers must have the home under contract by April 30, 2010 and close by June 30, 2010.

Under this new bill, first time home buyers are considered buyers who have not owned a home in the last three years. These first time home buyers will qualify for a tax credit up to $8000. If the home they are purchasing is under $80,000 they will qualify for 10% of the purchase price. If the home they are purchasing is $80,000 or more they will qualify for the $8,000. For example, if you purchase a home for $72,000 you will receive a tax credit of $7,200. If you purchase a home for $105,000 you will receive a tax credit of $8,000.

The tax credit has also been expanded to include sellers who would like to sell their home and “move up” to a new residence. These sellers will qualify for the $6,500 tax credit if they have lived in their home for 5 consecutive years in the last 8 years. In order to qualify, the homeowner must have used the property as a primary residence and not as an investment property. For example, if you purchased your home in 2001 and lived there until you sold the property in 2007 you would qualify for the tax credit. Or if you purchased your home in 2004, have used the home as a primary residence and would like to sell you home and move to a new home now you would qualify for the $6,500 tax credit.

The new bill has also expanded its income limits to include a single person earning up to $125,000 and married couples earning up to $225,000.

Experts say these changes were made because the original tax credit did not create the effect they had originally hoped. They thought it would create a ripple effect that would benefit both buyers and sellers. However, the first time home buyers who were purchasing were mostly buying vacant, foreclosed homes whose sellers were not benefiting at all. Now, first time buyers can receive an $8,000 tax credit for purchasing a home for the first time and sellers can benefit by receiving $6,500 for selling their home and purchasing a home that better suits their need and wants.

Don’t forget. The clock is ticking. The home must be under contract by April 30, 2010 and close by June 30, 2010 and there is not much thought of another extension.


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