Expanded Tax Credit Benefits First Time Home Buyers and Sellers Too
If you’re looking to buy or sell your home in the Columbus Ohio area, the extended and expanded United States Home Buyer Tax Credit may benefit you.
Effective November 7, 2009, the $8,000 U.S. First Time Home Buyer Tax Credit, which was set to expire on November 30, 2009, was extended until April 30, 2010 and expanded to include not only first time home buyers, but also current home owners who have owned their home for at least 5 years.
Home Buyer Tax Credit for First Time Home Buyers:
Eligible first time home buyers can receive a tax credit of 10% of the purchase price of the home you buy, up to $8,000 (Married couples filing separately can each receive a $4,000 tax credit). You can be considered a first time home buyer if you haven’t owned a principal home in the United States of America, in the last three years. If you’re a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify.
Home Buyer Tax Credit for Current Home Owners:
The original first time home buyer tax credit has also been expanded to home buyers who have owned a home, at some period during the last three years, and lived in the home, as their principal residence for five consecutive years, of the last eight years. If you qualify, you can receive a tax credit of 10% of the purchase price of the home you buy, up to $6,500 ($3250 if married but filing separately).
Home Buyer Tax Credit Deadline Extended into 2010
To take advantage of the extended Home Buyer Tax Credit, buyers must be in contract to purchase a home by April 30, 2010 and close on the home by June 30, 2010.
Good News Military Home Buyers – Extended Deadline
If you’ve been serving in the US Military, outside the United States for at least 90 days in the last year, you’ll have until June 30, 2011 to close on your home and take advantage of the home buyer tax credit.
No Early Repayment Penalty
Good news, the buyer does not need to repay the tax credit, as long as you occupy the home for three or more years. If you should sell the property, during the first 3 years, the full amount of the credit will be recouped on the sale.
Income Guidelines for the Home Buyer Tax Credit:
Income limits have also been increased with the expanded Home Buyer Tax Credit program. Individuals who earn up to $125,000 are eligible for the full tax credit. Those who earn more than $125,000 can receive a partial credit. Single filers who earn $145,000 and above are ineligible for the tax credit.
Joint filers who earn up to $225,000 are eligible for the full tax credit. Those who earn more than $225,000 can receive a partial credit. Joint filers who earn $245,000 and above are ineligible for the tax credit.
Maximum Purchase Price?
Qualifying home buyers may purchase a property with a maximum sales price of $800,000.
Down Payment Assistance
If you haven’t saved at least 3.5% for your down payment, Ohio does have some down payment assistance programs in place to help with your down payment. However, the interest rate is typically higher than the current market mortgage rates. Some other options you may want to consider are to get a “gift” from a family member for your down payment or borrow from a retirement account that you can repay once you get your tax credit credit refund.
If a Parent Cosigns on a Mortgage, Will Their Child Be Eligible for the Credit?
Yes, provided the child meets the other requirements for the tax credit.
Taking Advantage of the Home Buyer Tax Credit
You can claim the credit on your 2009 or 2010 tax return. If You Purchase your home in 2010 you will have the option to:
- Claim the tax credit on your 2009 return, even if your home purchase is completed after December 31, 2009.
- File an amended return for 2009, if your home purchase is completed after April 15, 2010.
- Claim the tax credit on your 2010 tax return.
3 things you will need to claim the home buyer tax credit on your 2009 tax return:
- Complete the applicable IRS form to determine the amount of your available credit.
- Apply the tax credit, when you file your 2009 tax return or an amended return.
- Include documentation showing your home purchase to your return or amended return.
What is the Home Buyer Tax Credit?
The tax credit is a direct reduction in tax liability owed to the Internal Revenue Service (IRS). If no taxes are owed, the IRS will issue a check for the amount of the tax credit that you qualify for.
Can Home Buyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS can prosecute people who have claimed credits when a purchase has not taken place.
Please note: This information is being provided as a community service and is not intended to be tax advice. You should contact your tax accountant or the IRS to verify this information or for any questions about the tax credit and your eligibility.
Central Ohio Home Sellers Should be Ready Sooner Than Later:
The new version of the tax credit has the potential to increase sales earlier this year because it ends April 30, 2010 and more buyers now eligible to take advantage of it. Typically Spring is the busiest season for the Columbus Ohio real estate market, however, I am already starting to see an increase in market activity. So the sooner you can get your home ready to go on the market, the better chance you have taking advantage of the additional market activity the First Time Home Buyer Tax Credit will generate.
National Association of REALTORS® economists estimate the tax credit has already contributed more than $22 billion to the economy, and that 2 million people will take advantage of it this year.
Low Home Mortgage Interest Rates in Columbus Ohio
As of January 5, 2010, 30 Year FHA fixed mortgage interest rates are currently around 5.25%, which is very low. I am hearing predictions that interest rates could go up to 6% in 2010. While still low, that much of a difference can affect how much home you can afford to buy. So you may have more buying power now, than you will later in 2010.
3 Great Reasons To Buy A Home Now
There couldn’t be a better time to buy a home in the Columbus Ohio area. The combination of low home mortgage rates, low home prices and the home buyer tax credit are not all going to last. So don’t wait.
GET FREE BUYER REPRESENTATION
Get started now by CONTACTING PETRA at 614-895-0496, or completing her Columbus Ohio Home Finder Service Form – to get real estate listing updates via email the same day they come on the market – with all the details including pictures, virtual tours condo fees and more.
As an experienced Columbus Ohio REALTOR®, with over $50 Million in real estate sales throughout Central Ohio, I can make your home search easier at no cost to you. I would love the opportunity to help you find your castle!