With the beginning of the New Year, many potential home buyers should make a resolution to purchase a home and have the ability to take advantage of the Home Buyer Tax Credit. Extended by Congress in 2009, this credit is available to buyers who sign a purchase contract before April 30, 2010 and settle on the home prior to June 30, 2010.

There are two eligibility categories designated by the Tax Credit Law:

  1. First Time Home Buyers. Defined as a buyer that has not owned a home for the past three years and the credit is up to $8000 or 10% of the purchase price of the home. The income restrictions are $125,000 for a single buyer and $225,000 for a couple purchasing the home. One of the more attractive conditions of the law is that the credit is truly a credit with no repayment provisions as long as you own the home for three years. If you sell prior to the anniversary, the total credit amount must be repaid.
  2. Current Home Owners who may want to purchase a home. The credit is $6500, and the home being purchased must be the buyers’ permanent residence. If a buyer wants to continue to own the home they are currently residing in, that is allowed, but again the home being purchased must be the new residence and be occupied by the buyer. One other condition in this category is that the buyer must have lived in their previous residence for five consecutive years of the last eight years. The other conditions that pertain to the First Time Home Buyers are similar.

Why is this credit so important? One of the reasons Congress extended the credit is to stimulate the housing market in the beginning of 2010. Also, with prices of homes in many areas of the country at or below previous levels it is anticipated that buyers can purchase a home at an attractive price and possibly give current homeowners the opportunity to do the same. And with mortgage interest rates still at an attractive level, possibly provide more purchasing power to a buyer.

This bill passed by Congress is the third version of the Home Buyer Tax Credit and from everything that I have seen or read Congress is not likely at this time to provide any further extensions in the future. Naturally, with any specific tax questions, it is highly recommended that you talk to a tax professional. And if you have any questions concerning available real estate for sale in the Greater Harrisburg area, please contact me at Don@DonRoth.com.