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Let Me Show You the Way Home!
Homebuyer Tax Credit
as revised November 2009 The homebuyer tax credit was extended and revised in November 2009. The revision now includes not only first time homebuyers, but also current homeowners who are looking to purchase another home as their primary residence. Sorry, investment properties are not included (although I wish they were). There are also special exceptions to some of the rules for military service members. Although many potential homebuyers are sitting on the fence, seemingly afraid to buy a home at this time, this is the perfect time to purchase a home either here in Virginia Beach, the greater Hampton Roads area or almost anywhere in the US. This tax credit is a terrific tool for qualified homebuyers to make a great deal out of an already outstanding buyers market. Homes are currently selling at very good prices (as compared to a couple of years ago). Many sellers are lowering prices and offering closing cost assistance to homebuyers or other concessions in order to get their houses under contract. Homebuyers also have an option to choose from many Foreclosed and Bank Owned properties that also present themselves as great opportunities for exceptional buys. Qualified buyers can even use the homebuyer tax credit as down payment funds. With the ability to buy a home at a great price (below market value) at little to no up front costs (sellers paying all or most of your closing costs) and on top of that throw in a large homebuyer tax credit when you file your year end tax return, why are you not out with me shopping for a home? There have been several changes to the homebuyer tax credit and a there's only a limited time frame to take advantage of it. Please read on for a brief description of the homebuyers tax credit. The links provided at the end of this article will go into more detail. You may be eligible for the homebuyers tax credit if: - You are a US citizen who files taxes.
- If you have not owned a home in the last 3 years, you may be eligible for a tax credit up to $8,000.
- If you are an existing homeowner and have lived in your home for five consecutive years of the previous eight years, and are buying another home to be your principle residence, you may be eligible for a tax credit up to $6,500.
- Your modified Adjusted Gross Income is less than $145,000 (Single); or $245,000 (Married).
- You purchase a home before May 1, 2010.
- Homes under contract by April 30, 2010 and closed by July 1, 2010 will still qualify.
- Homes bought under $800,000 qualify.
- Any type of home qualifies to include single family homes, condominiums, and townhomes, provided it will be your principle residence.
- Vacation homes, second homes, investment properties do not qualify.
Will you have to pay the homebuyer tax credit back? Under normal circumstances, NO.
But..... a portion of the homebuyers tax credit will have to be repaid if the homeowner sells or stops using the house as a principle residence within three years after buying it. This is typically called a recapture tax. The tax credit is fully refundable. For instance, if you were a first time homebuyer and would typically owe $1,000 when you file your year end tax return, but qualify for a full $8,000 homebuyer tax credit, you would end up with a tax return of $7,000. or If you were previous homeowner and were going to be receiving a tax return of $1,200, but qualify for the full $6,500 homebuyer tax credit for previous owners, you would be receiving a return of $7,700.
Using the Tax Credit as Down Payment Funds - Qualified homebuyers can use the Virginia Housing Development Authority's (VHDA) "Homebuyer Tax Credit Plus" loan to finance down payment and closing costs up to 5% of the sales price, using a second mortgage.
- The second mortgage helps cover the down payment and closing costs, with zero interest and no payments for the first 12 months so that it can be repaid in full at the time you receive your homebuyer tax credit.
Special exceptions for military service members:
- Military members who sell or move from a tax credit home within three years of the initial purchase date due to government orders for qualified official extended duty (extended duty at least 50 miles away from the homeowner's principal residence or residing under government orders in government quarters) are exempt from the recapture tax and will not have to repay any portion of the tax credit back.
- For military members who are ordered on a period of qualified official extended duty outside of the US for a period of at least 90 days, the deadline dates are extended for one year. For these homebuyers, the tax credit applies to sales with a binding sales contract in place on or before April 30, 2011 and closed by June 30, 2011.
More Information Frequently Asked Questions
Tax Credit Comparison Chart Applying the Tax Credit to Your 2009 Tax Return Tax Credit Form (5405)
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Home Advice
Get the answers on home selling and buying.
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Ed Graybill
Phone
(757) 201-0718
Fax
(757) 427-1768
E-Mail Me
Wainwright Real Estate
4098 Foxwood Drive
Virginia Beach, VA 23462
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