November 12, 2009
First-Time Homebuyer Credit Extended
Real estate is a foundation of our economy. So when real estate catches a cold, Washington usually lends a hand to keep the rest of the economy from suffering.
The 2009 economic stimulus act gave "first-time homebuyers" (defined as those who have not owned a primary residence for three years) a tax credit equal to 10% of the new home's purchase price, up to $8,000 ($4,000 for married couples filing separately). This credit is available for purchases through November 30, 2009. (Buyers who sell that home or convert it to rental use before 36 months must recapture the credit in the year the home is sold or converted, making the "credit" more of an interest-free loan.) That credit phases out for incomes between $75,000 and $95,000 ($150,000 and $170,000 for joint filers).
On November 9, President Obama signed the Worker, Homeownership, and Business Act of 2009. That Act extended the first-time homebuyer credit for purchases signed before May 1, 2010 and closed before July 1, 2010. The new law also makes these changes:
• It limits the credit to homes costing $800,000 or less.
• It raises the income level to qualify for the credit ($125,000 for individual filers and $225,000 for joint filers).
• It extends the credit, up to a limit of $6,500, for buyers who have maintained the same principal residence for any five-consecutive year period during the eight-year period ending on the date they buy a new principal residence.
Buying a home has always offered tax-saving opportunities. The new law makes these opportunities even more attractive. So if you're thinking about buying or selling a home, call us at 615.790.5998.
Sincerely,
William D. Brooks, CPA/PFS