$8,000 Tax Credit Extended

Congress extends $8,000 Tax Credit to both Existing and Current Home Buyers

The Naperville area real estate market received more good news. Congress passed new legislation to extend the home buyer tax credit to not just first-time buyers, but also existing homeowners and has been signed by President Obama. Here’s the breakdown of the provisions of the new tax credit and how it impacts home buyers.

Who Qualifies for the Tax Credit

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners are eligible for the $6,500 credit if they have lived in their current residences for at least 5 years.

To qualify for the credit, home buyers must meet certain income guidelines. Income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

The purchase price of the home is capped at $800,000. In other words, any home pruchase above $800,000 is not eligible for a tax credit.

How to Claim the Tax Credit

Qualified home buyers can claim the tax credit on purchases completed in 2010 on their 2009 income tax returns. If the credit exceeds their tax bill, the government will issue a check. Home buyers do not have to repay the credit, provided the home remains their primary residence for 36 months after purchase.