Home buyer tax credits explained

It's not very often that the government wants to give you money. When they do, it's usually not very much. We are currently in a situation where they want to do both, give you money and give you a sizable amount. The question is, do you want to take advantage of the program. As you may know, the federal government extended the first-time home buyer tax credits near the end of last year. Some of you may be wondering if it's still the same as the one that was in effect last year. While there were some minor changes to the existing program the big change was the tax credit for those who want to move up and purchase another home. I've provided some of the highlights of the new program below. This program will end sooner than most people will take advantage of. Don't be one of those people. If you are at all thinking of purchasing a home, do it now. Prices are low, interest rates are low and Uncle Sam wants to reward you for doing it. Have you ever heard a relative talking, saying how they could have purchased such and such a property 10 or 20 years ago for some unbelievable price? Well, this will go down as one of those times. Don't let it pass you by.

HOME BUYER TAX CREDITS

$8,000 First-time Home Buyer Tax Credit at a Glance

� The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.

� The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer's principal residence within three years after the initial purchase.

� The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.

� The tax credit applies only to homes priced at $800,000 or less.

� The tax credit now applies to sales occurring on or after January 1, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed by June 30, 2010 will qualify.

� For homes purchased after November 6, 2009 and on or before April 30, 2010, single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

$6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

� To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.

� The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer's principal residence within three years after initial purchase.

� The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $6,500.

� The tax credit applies only to homes priced at $800,000 or less.

� The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.

� Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

For further information and questions, please call your local IRS office or go to their website,

http://www.irs.gov/newsroom/article/0,,id=204671,00.html