On November 6, President Obama signed a bill into law which extends the first-time home buyer tax credit of up to $8,000 to first-time home buyers until April 30, 2010, and expands the credit to $6,500 for current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
The Silicon Valley Association of REALTORS® (SILVAR) commends the U.S. Senate, Congress for passing the extension and expansion of the current home buyer tax credit because local REALTORS® see the measure as an important step in ensuring a real estate and economic recovery.
"We commend our lawmakers for extending and expanding the tax credit because extending the first-time home buyer tax credit and expanding it to a wider group of qualified buyers is the fastest way to get our economy on the path to recovery," according to SILVAR president Julia Truesdale Keady.
Keady underlines the importance of the new home buyer tax credit. "Extending the tax credit to current homeowners will open the market to repeat buyers, which will ease the flow and positively impact related goods and services," Keady says.
It is estimated the extended and expanded home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year, along with $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.
SILVAR, through information from the National Association of REALTORS®, provides the following answers to questions about how the extended home buyer tax credit can help prospective home buyers:
Who qualifies for the extended credit?
First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010, and current home owners purchasing a home during the same period, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight, qualify for the extended tax credit. To qualify as a "first-time home buyer" the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which properties are eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including single-family homes, condos, townhomes, and co-ops.
How much is available?
The maximum allowable credit is $8,000 for first-time home buyer and $6,500 for current homeowners.
How is a buyer's credit amount determined?
The credit may only be awarded on homes purchased for $800,000 or less. Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. Home buyers earning more than the maximum qualifying income - over $145,000 for singles and over $245,000 for couples, are not eligible for the credit.
Can buyers still qualify if they close after April 30, 2010?
As long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the tax credit need to be repaid?
The buyer does not need to repay the tax credit, if the buyer occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
For more detailed information about the Extended Home Buyer Tax Credit, visit www.realtor.org/home_buyers_and_sellers.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.