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Tax Credit Extended – and Expanded to Include Current Homeowners

November 9, 2009 | By Kelley Koehler | Filed Under Home Buying 

Well, Friday it became official.  Remember that $8000 tax credit I kept talking about where you had to be a first time buyer and close before the end of November 2009?  It’s been extended – and expanded.

If you’re a first time buyer, you don’t have to rush to close before the end of November any more to get your $8000 tax credit.  Now, you have to be in a written binding purchase contract by April 30, 2010, and have to close before July 1, 2010.

Additionally, income limits have been raised for the program: to $125,000 if you’re single and $225,000 if you’re married.

The additional big news is that if you already own a home, you can get up to $6500 as a tax credit incentive to purchase.  They define home owner as someone who has used a home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

Whether you’re a first time buyer or an existing home owner, there are now limits on the home price.  You can buy up to $800,000 and still get the credit.

There are a couple other smaller details as well – the National Association of REALTORs put out a helpful little chart to help you figure out if you qualify for the tax credit.  They also have some questions an answers here, to help clarify the rules. 

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Other Information That Might Be Helpful

• $8000 Tax Credit for First Time Home Buyers – Expires Soon (August 26, 2009)

  I’ve talked about it a little in my Tucson real estate market reports, but for those that don’t know – there’s an $8000 tax credit for first time buyers that expires December 1, 2009. The home buyer tax credit is only for first time buyers, according to the IRS. And those are people who have not owned a home in the last 3 years.

• Tucson Market Statistics and Report – November 2009 (December 7, 2009)

  Hello November! The holiday season is upon us – bringing the yearly slow down in home sales in Tucson. If you look at the seasonal trends in the number of homes sold in Tucson citywide, you can see we traditionally peak around May and have slow winter sales. I don’t expect this winter to be any different. Sure, there’s a tax credit that might be an incentive for some, but there’s no urgency to move over the holidays for that – the deadline isn’t until the end of April 2010. The average sale price dropped below $200k again, for the second time in 2009, coming in at $195,721, while the median is basically unchanged for the year. Compared to the start of the year, the average sales price is down about 10% while the median sales price is the same. (Okay, it’s $250 less. I’m calling that insignificant.) Since the average is heading down and the median is holding steady, that tell us the lower end of the market is still moving and the higher end luxury homes are not.  There are more sales in those lower price brackets, enough to keep the median fairly steady, while the lack of sales of higher priced homes brings that average down. The number of homes for sale were down a tiny bit, pending sales were down, and sales were down in November. Pending sales went from 2060 to 1747 – but we expected that, right? Remember, when that tax credit first came out, you had to close by the end of November. It would make sense that there’d be a huge push to close those pending sales by the end of November. Overall, sales were down 55 units, to 850.

• FHA 90 Day Rule and First Time Buyers (September 28, 2009)

  FHA says that the owner of the property has to have held it 90 days before any Buyer with FHA financing can buy it. In fact, the offer itself must be dated on the 91st day or later.

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