Take Advantage of Real Estate Buyer Tax Perks ASAP December 1
Just as homebuyers scurried to buy homes before the end of the year in order to qualify for a special $8,000 first-time home buyer tax credit, Congress decided to extend it a little bit longer. The program has been very successful at encouraging sales, and many housing industry observers credit it with helping the housing market rebound. Now first-time buyers have until the last day of April, 2010 to get purchases under signed contract in order to enjoy the big tax perk. Keep in mind that the IRS defines a “first-time” buyer as anyone who has not bought a house within the past three years. You can even meet this standard despite the fact that you’ve owned another property such as a rental cottage or beach house, as long as the house that has been your principle residence was not owned by you.
But what is really making headlines right now is not the 4-month extension on the first-time tax incentive, but a brand new $6,500 tax benefit that applies to people who already own their own home. The innovative credit applies to those who have owned a home for at least five consecutive years and have used it during that time as their primary residence. If they decide to sell in 2010 and buy another home, then they can pocket the extra $6,500 in tax benefits – which can help many buyers struggling to pay closing costs or cover their down payments.
Check with a tax planner for details, because a few exceptions do apply. But most of those only apply to taxpayers who make rather high incomes. Singles who earn more than $125,000, for example, or married couples with income that totals more than $225,000 are ineligible. There are also some stipulations regarding how long you live in the home after you buy it, and those were primarily added to the legislation to stop professional investors and real estate speculators from taking unfair advantage of this tax benefit.