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Good news!!! The President has signed into law an extension of the credit with some modifications. Here are the latest guidelines as of 11/6/2009: NAR Issue Brief Homebuyer Tax Credit Changes National Association of REALTORS ® Government Affairs Division500 New Jersey Avenue, NW, Washington DC, 20001 Congress has extended and expanded the homebuyer tax credit. The modifications in the column labeled "December 1 – April 30, 2010" become effective when President Obama signs the bill. All changes made to the current credit become effective on that date, as well. FEATURE Jan 1 – November 30, 2009 Rules as enacted February 2009 December 1 – April 30, 2010 Rules as enacted November 2009 Firsttime Buyer – Amount of Credit $8000 ($4000 married filing separate) $8000 ($4000 married filing separate) Firsttime Buyer – Definition for Eligibility May not have had an interest in a principal residence for 3 years prior to purchase Same Current Homeowner – Amount of Credit No Provision $6500 ($3250 married filing separate) Effective Date – Current Owner No Provision Date of Enactment Current Homeowner – Definition for Eligibility No Provision Must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years Termination of Credit Purchases afterNovember 30, 2009. (Becomes April 30, 2010 on Date of Enactment.) Purchases after April 30, 2010 Binding Contract Rule None So long as a written bindingcontract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close. Income Limits (Note: Increased income limits are effective as of date of enactment of bill) $75,000 – single $150,000 – married Additional $20,000 phase out $125,000 – single $225,000 – married Additional $20,000 phase out Limitation on Cost of Purchased Home None $800,000 Effective Date of Enactment Purchase by a Dependent No Provision IneligibleEffective Date of Enactment Antifraud Rule None Purchaser must attachdocumentation of purchase to tax return Following is an exerpt from the National Association of Realtors newsletter: Here are 6 things you should be able to explain to prospects and clients: 1. Buyers have until July 2009 to make a purchase that qualifies. The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It´s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9. 2. Buyers don't really have to be "first-timers." The tax credit is actually available to any individual or household that hasn´t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven't owned a primary residence in recent years. 3. Even if buyers exceed the income limit, they can benefit from the credit. The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if your clients make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it´s a primary residence and is in the United States. 4. Think of it as an interest-free loan. The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan. 5. You don't have to be authorized before making a home purchase. There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise. 6. New-home construction qualifies. For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home.However, any home that is not a primary residence, such as a vacation home or income property, does not qualify.
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