On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time home buyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time. Below is a summary of a few key points of this bill:

What is a tax credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

What are the New Deadlines? In order to qualify for the credit, all purchase contracts need to be signed no later than April 30, 2010 and close no later than June 30, 2010.

Who qualifies?
First-Time Home buyers: First-time home buyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What are the Income Caps?
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.

As noted above, in order to qualify for this credit, you must have a home under contract by the end of April. So don't delay your house searching if you would like to benefit from this program.

Visit www.irs.gov/newsroom/article/0,,id=204671,00.html for more details.    
 
If you have any questions regarding this program, please call us at 847 592-9215.

Make today an amazing day!

John Santorineos


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