For those who think they have a chance at qualifying for the $8,000 first-time homebuyer tax credit, the time to act is now. Many industry experts and elected officials say that the chances for yet another program extension are slim.
History of the credit
The original homebuyer credit was part of the Housing and Economic Recovery Act of 2008. In this version, the credit had to be paid back. In hindsight, there were few takers, precisely because of that fact.
The second version was part of the American Recovery and Reinvestment Act of 2009, where the maximum was an $8,000 tax credit for homebuyers who closed before December 1, 2009. The credit would not be paid back, unless the first-time homebuyer would move out within three years of the purchase.
This version was so successful that the inevitable further extension included a partner tax credit for homebuyers who are not first-timers, as long as they have stayed in their current house for five consecutive years out of the last eight.
Details
This means that the deadliest deadline for the first-time homebuyer tax credit and the other homebuyer credit will be on April 30, 2010. All qualifying deals submitted on that date must close by midnight of June 30, 2010.
Finally, the credit is not a flat $8,000 amount. That figure is the upper limit of the credit. The actual credit is 10% of the house’s purchase price with that amount as the limit. Should the house go past $800,000 in price, then the credit will not be applied. Similar rules follow for the $6,500 tax credit for homebuyers who are not first-timers.
