Homebuyer Stimulus Tax Credits: Andele! Andele!

Under the extension of the first time homebuyer tax credit program, first time homebuyers are eligible for a tax credit (not just a tax deduction) if they are under contract by April 30th, 2010, and close on their purchase no later than June 30, 2010.

The tax credit is equal to ten percent (10%) of the purchase price for the home, with a maximum of $8,000.00.A first time homebuyer is defined as someone who has not owned a home within the last three (3) years, so the definition is fairly liberal.

The program was extended before its initial sunset date last fall. When it was extended, Congress added an additional tax credit for current homeowners who “move up.” Owners who already own a residence and buy a new home within the same time constraints may be eligible for a $6,500 tax credit, provided that they owned their current home for five (5) consecutive years during the last eight (8) years.

The bonus factor on the tax deduction is that it is not a “standard” deduction, but a dollar-for-dollar credit. If the taxpayer cannot use the entire credit, it is refundable, which means the taxpayer will receive a refund from the IRS for the unused portion of the credit. Now, that’s a nice bonus to spend at Lowe’s. Or better yet, at your neighborhood hardware or landscaping supply store!

The tax credit applies fully to taxpayers who earn $125,000 and below per year. Taxpayers who earn more than that but below $145,000 are eligible for a partial credit. For joint filers, the tax credit applies fully to a couple who earn $225,000 in combined income, with a partial credit up to a maximum of $245,000 in joint earnings.

The maximum purchase price that this credit can be used towards is $800,000.

But April 30th is coming soon.

Andelé! Andelé!