Home buyers must meet deadlines, income limits and purchase price limits to qualify for tax credits.

Now that the Feds have approved the extension and expansion of the first-time homebuyers tax credit, many homebuyers are wondering how this will affect their next home purchase. For first-time homebuyers, this is basically an extension of the prior credit. For move-up buyers, this credit is available for homes purchased starting November 7, 2009.

How much can a homebuyer expect as a refund from the tax credit?

• First-time homebuyers may qualify for up to an $8,000 tax credit.
• Move-up (existing) homebuyers may qualify for up to a $6,500 tax credit.
• The maximum purchase price allowed is $800,000 under the new provision. There was no maximum purchase under the prior provision, which expired November 6, 2009. Those who purchased homes on or before November 6 will fall under the rules of the old provision.
• The tax credit is calculated as 10% of the home’s purchase price, subject to the above provisions.

Who qualifies for the tax credit?

• First-time homebuyers include those who have never owned a home as their principal residence as well as those who haven’t owned a home as their principal residence for the last 3 years.
• Move-up homebuyers must have owned and occupied their homes as their principal residence for at least 5 consecutive years of the last 8 years in order to qualify for the credit. They do not need to be currently occupying the home as long as this requirement is met.
• For move-up homebuyers, there is no requirement for them to purchase a higher-priced home in order to qualify for the credit.

Are there income limits that must be met to qualify for the tax credits?

• Single homebuyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit, depending on the purchase price of their home.
• For homebuyers with incomes in excess of these limits, the credit decreases for homebuyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for homebuyers filing jointly.
• For single homebuyers with income in excess of $145,00 and married homebuyers with income in excess of $245,000, the homebuyer credit is phased out completely.
• First-time homebuyers who purchased prior to November 7 will need to meet the income restrictions as stated in the original 2009 first-time homebuyer tax credit. Prior limits were $75,000 for singles and $150,000 for married homebuyers.

How long do homebuyers have to take advantage of the credit?

• First-time homebuyers and move-up homebuyers will have until April 30, 2010 to have a purchase agreement accepted and until June 30, 2010 to complete their purchase and close escrow.
• For purchase agreements entered into prior to November 7, 2009 the new credit provisions will apply as long as escrow closes on or after November 7. There is no provision mentioning the contract date of the purchase agreement.

Does the homebuyer tax credit need to be repaid?

• Homebuyers who retain their homes as their principal residences for 3 years or more will not have to repay the tax credit.
• Homebuyers sell their homes within 3 years of their purchase will need to repay the tax credit upon the sale of the home.

If you’re thinking of buying a home in the Santa Clarita Valley in time to meet the tax credit deadlines, don’t let the ’slow season’ pass you by! Typically there are fewer buyers as we head into the holiday season, which means less competition for homes and quite likely lower prices than we’ll see once the buying season heats up again after the New Year.

Santa Clarita Realtor Linda Slocum is a Certified Distressed Property Expert (CDPE) and Certified Residential Specialist (CRS) specializing in Santa Clarita residential real estate and short sales. You can reach her at 661.670.0349 or at Linda@SantaClaritaRealEstateBlog.com. To search for Santa Clarita homes, use our neighborhood search tools or visit HoneyStartPacking.com.