The first time homebuyer tax credit, or when is the new deadline?

I know everyone in congress is busy patting themselves on the back and preparing new campaign marketing materials because they passed the tax credit extension, but let’s take a look at what we really have.  I rarely like to take the government at its word, but this bill seems like it actually does what it says.

First off, the tax credit is extended to April 30, 2010 with a caveat.  If you have a binding contract signed by April 30th you have until June 30th to close.  This is likely a response to the nightmare that was October and November, where the deadline created a flood of mortgage approval requests and attempted closings that have been steadily pushed farther back.  USDA RD loans in particular have been experiencing extreme delays in the Fredericksburg area, mainly due to the fact that they still do 100% financing.

There are some limitations.  For closings after November 6, 2009, you can’t make more than $125,000 if single or $225,000 if married filing jointly. That is based on modified adjusted gross income. If you don’t know what that is, I suggest talking to an accountant or tax preparer.  People over that amount still qualify for a tax credit, but it decreases.

The home price must be at or under $800,000, and the amount of the credit is not necessarily $8000.  It is actually valued at 10% of the homes purchase price to a maximum of $8000, so if you buy a home for less than $80,000 you will get less of a benefit.  However, buying a home for less than $80,000 is a pretty big benefit in my market!

Congress also added a tax credit for repeat buyers.  Again, there are some caveats, but most guidelines and deadlines are the same.  The credit is $6500 instead of $8000.  I think this really helps encourage sellers to upgrade, which will help stimulate the economy. Sellers right now are scared, and a tangible benefit like this will help them get over their fear.

Finally, you can double check everything I say at a few different sites.  I find that the NAHB site is the most user friendly.  I hope this helps you make the decision to buy.