Home Buyer Tax Credit Update

Some of the highlights of the new Home Buyer Tax Credit that differentiate it from earlier bills are:

• Move-up buyers who have owned a principle residence for 5 of the last eight years are eligible.
• The maximum amount of the tax credit is $6,500 (or 10%)
  
• Qualifying modified adjusted gross income (MAGI) limits have been increased from $75,000 for individual taxpayers and $150,000 for joint filers to $125,000 and $225,000 to claim the full tax credit, respectively. Like the earlier bill, the credit phases out for individuals with over $125,000 to $145,000, and joint filers who earn $225,000 to $245,000.

The information on the IRS Web site lays out most of the provisions of the extended Home Buyer Tax credit fairly well, so I'll just address a few questions which they do not sufficiently clarify:

• If you are a move-up buyer and you are wondering whether you qualify if your home purchase closes after November 6, 2009, but before December 1—you can stop wondering. Yes, you do. The new law went into effect when President Obama signed it, and home buyers, just like each of the earlier home buyer tax credits, can be claimed any time after the final settlement date (closing of the sale).
• The term move-up buyer is misleading. To claim the tax, buyers DO NOT need to buy a higher price home. Any single-family home or duplex bought as a primary residence qualifies.
  

Download this FAQ (PDF) from the National Association of REALTORS for more good insights to the Home Buyer Tax Credit.