Homebuyers' Tax Credit extended to April 30, 2010

The Worker, Homeownership and Business Assistance Act of 2009 extends the $8,000 tax credit for home buyers who are purchasing their first home and expands the program to offer a credit of $6,500 to current homeowners seeking to relocate. Additionally, the bill raises the income limits for single purchasers and couples.

$8,000 First-Time Home Buyer Tax Credit At a Glance

• Applies only to first time homebuyers - A person (or couple) that has not had any ownership interest during the three-year period prior to the purchase
• Is equal to 10% of the home's purchase price or up to $8,000, whichever is lower
• Applies only to homes priced at $800,000 or less
• Applies to sales occurring January 1, 2009 - April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a transaction completed by June 30, 2010 will also qualify.
• For homes purchased January 1 - November 6, 2009, the income limits are $75,000 (single) and $150,000 (married couples filing jointly)
• For homes purchased November 7, 2009 - April 30, 2010, the income limits are $125,000 (single) and $225,000 (married couples filing jointly)

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

• Applies only to relocating homeowners - Eligible home buyers must have owned or resided in their homes for at least five consecutive years out of the last eight years
• Is equal to 10% of the home's purchase price or up to $6,500, whichever is lower
• Applies only to homes priced at $800,000 or less
• Applies to sales occurring November 6, 2009 - April 30, 2010. In cases where a binding sales contract is signed by April 30, 2010, a transaction completed by June 30, 2010 will also qualify
• The income limits are $125,000 (single) and $225,000 (married couples filing jointly)

More about the Homebuyer Tax Credit

How do tax credits work?
Tax credits are claimed on an individual's income tax return. Once the individual's total tax owed has been computed, tax credits can then be applied to reduce the total tax bill. For example: If a qualified purchaser (after all income items, exemptions and calculations are taken into account) has a total tax liability of $10,000, the First Time Homebuyer Tax Credit of $8,000 would be applied towards the tax liability, making the individual's total tax due $2,000.

What homes are eligible for the tax credits?
Any home that will be used as a principal residence will qualify for the credit. This includes single-family detached homes, town homes and condominiums, manufactured homes (e.g., mobile homes) and houseboats. Any home purchased for $80,000 or more qualifies for the full $8,000 tax credit. Homes valued at less than $80,000 qualify for 10% of the cost. For example: If you purchase a home for $50,000, the credit would be $5,000.

Do I have to repay the tax credit?
As long as you live in the purchased home for at least three years within the date of purchase, you will not have to repay the tax credit. If you sell the home before the three-year window, you will be required to pay back the full amount of any credit.

Want to know more?
Visit the IRS website for more information. Contact SAFE's Mortgage Department at (803) 469-8600 ext. 313 to learn more.

Please consult your tax advisor for specific tax-related information.

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HOMEBUYERS TAX CREDIT EXTENDED