How Existing Homeowners Qualify For Up To $6,500 Credit
Interest rates are low, and if you have enough equity to sell your property at break-even or for a profit, the homebuyer’s credit may be enticing you put your house up for sale. House market predictions show that home prices are rebounding in certain areas, and so the bottom of the housing market may be close, if not already over. If you are looking to upgrade, you will want to buy when prices are low and rates are high, but also when you have enough equity to jump to a new place. Before you do, realize that there are some restrictions and conditions you have to meet to take advantage of the homebuyer’s credit. For one, you or your spouse will have had to have lived in your existing home, as a primary residence, for five out of the last eight years. There are income limitations and some other restrictions, but for the most part, the average homeowner stands a good chance of qualifying for this one-of-a-kind offer that is unlikely to repeat itself within their lifetime.
Income Restrictions
A single homeowner who makes less than $125,000 can qualify for the full $6,500. The amount you can claim decreases between $125,000 and $145,000 for a single person. It isn’t available for a single person making over $145,000. Married couples have a higher income limit of $225,000. The credit is modified to decrease between $225,000 and $245,000. Any couples making over $245,000 aren’t eligible for the credit at all.
Other Restrictions
You cannot buy a home that is being sold by a close relative. This includes your spouse, your children, parents, and grandparents. You’re not allowed to claim the credit if you have been claimed as a dependent on anybody else’s tax return for the same year you buy the home. You also need to be at least 18 years of age or be married to someone who is more than 18 years of age to qualify.
How The Credit Actually Works
You are allowed to purchase any home below $800,000, and finance it however you like. The credit is going to apply to only 10% of the full purchase price or $6,500, whichever is lowest. The full purchase price includes the down payment you are offering to the bank to secure the mortgage, as well as the mortgage note. You have to close on your home before May 1, 2010 in order to claim this credit.
You Don’t Have To Upgrade To Qualify
Even if your main objective is downsizing, instead of upsizing, you can still qualify for the homebuyers credit. Most people will use it to upsize their homes, but with that option comes higher utility and maintenance costs. There were be a few people who are going to use it to downsize as they near retirement and no longer have a need for a large space. The homebuyers credit extension was available from between November 6, 2009 to May 1, 2010 and should be claimed on the tax forms of the year in which the closing took place.
This entry was posted on Friday, January 29th, 2010 at 10:17 am and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
