ALREADY OWN YOUR HOME? WANNA BUY A NEW ONE? The New Fed Existing Home Owners Credit Could Provide a Little Spark For You!
FED $6,500 TAX CREDIT APPLIES TO MANY - BUT NOT ALL - VETERAN HOMEOWNERS!
In the flood of news recently to extend the very popular First Time Homebuyer's Tax Credit - which offered up to an $8,000 IRS Check to many first time homebuyers beginning last February - some long-time homebuyers also have reason to cheer!
Effective upon President Obama's signature, on November 6th, many existing homeowners looking to find a new home were also given a bit of a financial boost. For those who contract for their home purchase transaction between November 6th and April 30th, 2010, many may qualify for a fairly sizable $6,500 tax credit - either an offset against income taxes due, or a straight tax refund. The new home purchased must close no later than next June 30th. See Kenneth R. Harney's story in the Chicago Tribune for more details.
Similar to the First Time Buyer Credit, however, the credit for current homeowners does have a few strings attached.
First, only those who have resided in their previous home for five consecutive years out of the past eight years qualify for the credit.
Also, the new home must be your new Principal Residence - no credit offered for second homes, vacation homes, or in-town condominiums. However, there is no requirement you must sell your first home - the old homestead can be rented out to a tenant, or your old home can become your new "second" home - you will still qualify for the Fed incentive.
Purchasing a more expensive home is not a requirement - buyers still qualify for the credit if they are buying a smaller or less expensive property.
The new home can cost no more than $800,000, and the credit caps out at 10% of the home purchase price. To receive the full credit, therefore, your new home must cost at least $65,000. In Chicago, that is very easy to do; few homes here sell for less than $65K!
There is an income cap - $125,000 for single taxpayers, $225,000 for married couples filing jointly. This is up significantly from the old First Time Homebuyer Program caps of $75,000 and $125,000 respectively.
Virtually any type of residential dwelling will qualify under the program - single-family homes or condos, condominiums, mobile homes, even house boats that would function as your primary residence. Even some two-flat buildings might qualify, if the entire building were to be occupied by the purchasing owner.
If you buy and close before the end of 2009, the credit can either be taken off the '09 Income Tax Return you file next year, or off paid 2008 taxes, by filing an amended return.
Buy in 2010? Again, you can take the credit off of 2009 taxes, or those filed in 2011, for next year's taxes.
Once the credit expires next year, will it again be extended? Those in the know say, "Not Likely!" We happen to agree!
So go for the credit now! Our Team expects a big surge in home buying interest among current homeowners who qualify, especially as the extended deadline approaches next spring.
DEAN MOSS & DEAN'S TEAM CHICAGO
