So You Want Free Money in 2010?

You came back?! Wow, I lost that bet - but glad you're here!

The first-time homebuyer credit has been in place since 2009 (I can say that now, it’s 2010) but since the extension in November, it seems there’s still a lot of misinformation out there about the credit. A few days ago, I talked with a first-time buyer who thought he had to be under contract by December 31 2009.

It might be time to back up and recap:

A first-time buyer is someone who has not owned a home the past three years. Married joint filers must BOTH meet the criteria to be eligible.
You must be UNDER CONTRACT – that means contract is signed and initialed – on a residential property you intend to use as your primary residence, by 11:59pm April 30 2010, and you must close before 11:59pm June 30 2010.
The maximum credit allowed for a first-time buyer is 10% of the purchase price, UP TO $8000. Homes priced at more than $800000 are not eligible for any credit (I guess they figure you don’t need the money at that point).
The credit is deducted directly from your tax liability for the year – if your liability is LESS THAN the credit, you get money refunded to you.
The tax credit isn’t limited to first-time buyers any longer … current homeowners who have lived in their home for five consecutive years – out of the past eight – are now eligible for up to $6500 in tax credit.
If you make $145001 or more a year ($245001 or more if filing jointly), you don’t qualify for the credit.

Clear as mud? The credit had an impact on the housing market in 2009, but I don’t expect we’ll see the same in 2010. Nevertheless it’s here to stay … at least until the end of June, but don’t expect that it’ll be extended again.

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