Realtor Q and A: Tax credit ends soon

Q: I've heard a lot about the home buyer tax credit but am not sure if I qualify?

A: The tax credit was part of a plan to stimulate the U.S. housing market and help address the economic challenges facing the nation. Originally passed by Congress in 2008 as part of a larger economic stimulus package, it was implemented in 2009 and extended to allow for maximum consumer participation. The program allows for an $8,000 tax credit for first-time buyers and up to $6,500 for (eligible) current home owners who purchase a new or existing home.

As recipients of the first-time home buyer tax credit, the purchaser and/or their spouse may not have owned a residence during the three years prior to the purchase. For current home owners looking to take advantage of the tax credit, they must have lived in their current residence for five consecutive years within the last eight. There may be other eligibility requirements so it's best to consult with a tax expert, such as a CPA, or your own tax preparer if you have specific questions.

One very important fact about the tax credit is that in order to get it, buyers must have a contract to purchase a home in place by April 30, and must close on the transaction by June 30.

Currently, there are tremendous opportunities available to buyers; however, indications are that these favorable conditions will not be around forever. Real estate markets are fluid and one has to take advantage of opportunities while they present themselves. Interest rates are expected to rise, moderately, in 2010, and the tax credit will only be available through the end of April. If you have been waiting for a "golden opportunity," then now is the time to get off the fence and take action. With just a few weeks left of the tax credit opportunity, there may be no better time for you to buy a home then right now.

Next weekend there will be an opportunity for potential buyers to preview homes currently listed on the market with the first "Realtor Nationwide Open House Weekend" April 10-11. The weekend-long event will provide potential home buyers with an opportunity to view homes throughout their communities and obtain information and answers to questions about specific properties, market conditions and the home-buying process. via UnionLeader

First Time Homebuyer Credit

Woo Hoo! Free money! Ok, well not quite.

When it was first proposed in the “Housing Rescue Bill,” the first time homebuyer tax credit was little more than an interest free loan. But not for everyone. What is not more widely known is that a person may fail to qualify if they make $75,000 or more.

Please read other parts of the fine print from the IRS Newsroom.

The credit:

• Applies to home purchases after April 8, 2008, and before July 1, 2009.
• Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
• Is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

The credit operates much like an interest-free loan because it must be repaid in equal installments over a 15-year period. Taxpayers will claim the credit on new IRS Form 5405, First-Time Homebuyer Credit.

If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. If you make an eligible purchase in 2009, you can choose to claim the credit on either your original or amended 2008 return, or on your 2009 return.

Not everyone will qualify for the credit. There are other rules that may impact your eligibility and decision to claim the First-Time Homebuyer Credit. Get all the information at IRS.gov.