If you are thinking about buying a home in 2010, you might want to do it before the end of April. That way, you can qualify for a tax credit of up to $8,000 (if you meet the other requirements).
The federal housing tax credit gives first-time home buyers some added incentive to buy a home. Granted, you should never purchase a home until you’re financially ready to do so. But it certainly helps to get a tax credit of up $8,000. The program has been extended until April 30, 2010, and it could even be extended beyond that cutoff. As of right now, however, you must buy a home by April 30 to qualify for the credit.
Here are some notable dates, straight from the horse’s mouth (the horse being the IRS):
“You must buy the home after April 8, 2008, and before May 1, 2010 (with closing to take place before July 1).” –Source
Housing Tax Credit Q&A
Here are some frequently asked questions about the program:
1. Who can claim the $8,000 housing tax credit?
Anyone that meets the loose definition of “first-time home buyer” is eligible for the federal tax-credit program. I put it in quotes because it has a broad definition. If you have not owned a home (as your primary residence) in the three years prior to your home purchase, then you meet the IRS definition of “first-time” buyer.
Example: Let’s say that I buy a house in February, and my closing date is on March 3, 2010. If I have not owned a home as my principal residence between March 3, 2007 and my 2010 closing date, then I’m eligible for the $8,000 housing tax-credit program. Of course, I might not qualify for the maximum $8,000 amount — that would depend on the purchase price of the home I bought. But I would qualify for a credit of some kind. Remember, you must purchase by the end of April, but your closing date can later than that (before July 1, 2010).
2. Are there any other restrictions, such as income?
Yes. Rich people are excluded from the tax-credit program. But seriously, there are some specific income limits for the program. Single filers must make less than $125,000 per year, and joint filers must make less than $225,000. Please note the publication date of this article (December 2009). This program could very well change in the future, so you’ll need to visit the IRS website for current details.
3. Is there anything for homeowners buying a new home?
Yes! Under the expanded tax-credit program, homeowners who sell their current home and then buy another one qualify for a credit as well. In this case, the credit amount is up $6,500. The same deadline applies.
4. Where can I learn more about the credit?
I recommend visiting the IRS website. There’s a lot of misinformation floating around about this program, especially on the Internet. I have seen some frightfully inaccurate information posted on blogs and websites. So start with this IRS explanation of the federal housing tax credit, and you’ll know exactly how it works.