Detailed info about Tax Credit

This information came to me from a lender in Frederick County, MD. I think it is a good summary of tax credits for a homebuyer. However, I urge you to double check with an accountant to make sure these figures are correct for YOUR tax situation.

If you have any questions, please call me or email me. I'm always here to help! -- Joanne Spivey, Exclusive Buyer's Agent, The Buyer's Best Realtors, Urbana, MD

Great News! Congress has passed a bill extending and expanding the tax credit provisions for buying a home. These provisions become effective for homes that close on or before June 30, 2010. Here are some of the key elements of the bill.

FEATURE RULES AS THEY APPLY TO THE EXPANSION

1^st Time Buyer $8,000.00 or 10% of the purchase price of the home for individuals

Amount of Credit or married couples. ($4,000 per individual if married filing separately) **

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1^st Time Buyer May not have had an interest (title) in a principal residence for 3 years

Definition of Eligibility. prior to purchase

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Current Homeowner $6,500.00 ($3,250 married filing separately)

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Current Homeowner - Must have used the home sold or being sold as a principal residence

Definition of Eligibility consecutively for 5 of the previous 8 years

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Binding Contract Rule So long as a written binding contract to purchase is in effect on April 30,

2010, the purchaser will have until June 30, 2010 to close.

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Income Limits $125,000 – single (phase out up to a maximum $145,000 income)

$225,000 – married (same as above with a maximum of $245,000)

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Limitation on Cost $800,000.00

Of Purchased Home

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Anti-Fraud Rule Purchaser must attach documentation of purchase to tax returns

Note: If a parent, who will not live in the property, cosigns for a mortgage, the child will be eligible for the credit as long as they meet all other eligibility.

Other restrictions that might apply per the IRS in which no tax credit would be due:

1. Buying the home from a close relative (spouse, parent, grandparent, child or grandchild. (purchase from a step-relative is allowed as long as there is not a direct blood relationship)
2. They do not use the home as a principal residence
3. They sell their home before the end of the year
4. They are a nonresident alien.
5. Their home financing comes from tax-exempt mortgage revenue bonds.

** Tax credit is not required to be paid back as long as the buyer lives in the property as their primary residence for at least 36 months.