The updated Homebuyer Tax Credit, as it is called now, isn’t just for newbies anymore. In its place is an extension of the previous first-time homebuyer credit and an additional incentive for current homeowners.
As the deadline approached for the initial homebuyer credit, I worked with several clients who were overjoyed to move from renting to owning and happy to get a check back, thank you very much. I’ve seen first-hand how the incentive helped push buyers toward a decision to act now.
In fact, I worked with one couple whose window of opportunity for this tax credit was closing fast due to processing time of the loan they’d chosen. We were high-fiving when we got to contract because we’d made it in the time-frame required, and it was so important to these buyers to take advantage of the incentive before it ran out. The extension and update gives others, who thought they had missed out, another chance.
Money Plans This couple and others I worked with acted because by getting up to 10% of the cost of the home bought, up to $8,000, as money in their pocket they felt better about their purchase. They planned on using their tax credit money as a fund for emergencies or repairs for their new home, such as funding replacement windows or a new heating and cooling unit. One client earmarked his credit to pay off his motorcycle loan, so he wouldn’t have that payment every month in addition to his new house payment.
New Version Now, I am wondering how the updated homebuyer tax credit allowance for current homeowners will play out. In the updated version, there is a credit for up to $6500 for homeowners who have owned their home and lived in it for five consecutive years out of the last eight.*
$6500 is nothing to sneeze at, especially these days. Working with buyers and sellers who are counting every penny, this extra money could help make the decision on a specific property a little easier.
If you are a current homeowner, how will this tax credit affect you? Take a minute to answer the poll to the right.
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*NAR Tax Credit Comparison Chart, Nov. 2009
Seek advice from a professional tax advisor for specific tax calculations and timing for claiming the tax credit. I am not a tax or legal advisor. You can also call the Internal Revenue Service at 1-800-829-1040 with specific questions.