A New Year’s Resolution You Won’t Regret!
Are you tired of the same old promises you make to yourself every January 1st but forget by February? Not this year! Here’s a 2010 resolution that’s so beneficial you simply must keep it: buy a Chester County home! Now that the Home Buyer Credit Act has been extended and qualifying income levels have been raised, this is an ideal time to purchase a house. Generally advertised as a tax credit for first-time buyers, the new legislation actually benefits many current homeowners, also.
Basic facts:
Changes: Originally slated to end in November 2009, the credit deadline has been extended to April 30, 2010. If you have a binding, signed contract and settle on a Chester County home before July 30, 2010, you are also eligible.
First-time buyers are those who have not owned a home in the last three years. They are eligible for a credit of 10% of the purchase price (not to exceed $800,000), up to $8000. Ownership of a vacation home or rental property not used as a prime residence does not disqualify a buyer as a first-timer.
Repeat buyers, or those who have owned and lived in a principal residence for at least 5 consecutive years of the last 8, may qualify for a credit of up to $6500.
Income levels have been increased to $125,000 for individuals and $225,000 for couples.
Military exception: For an active-duty member of the U.S. military serving an extended tour (90+ days) more than 50 miles from home, the deadline is April 30th (or June 30) 2011.
Applying for the credit is easy. Buyers purchasing in 2010 will have the option to claim the credit on their 2009 (by filing an amended return) or 2010 income tax return. Applicants will use the new IRS form 5405 and attach copies of their HUD settlement form.
Important notes:
- Applicants must be 18 years of age at time of settlement.
- Principal residences may include single family homes, condos, townhouses, co-ops, and duplexes.
- For married couples, the homeownership history of both parties must qualify for the credit.
- Recipients of the credit must own and live in the purchased home for at least 3 years or face repayment of the credit amount.
- Your Chester County home may not be purchased from any family member.
Remember that a tax credit is far more advantageous than a simple deduction as it provides a dollar-for-dollar reduction in what a taxpayer owes. If the amount of the credit exceeds the amount owed, a refund will be issued.
If you have specific questions or need additional information, contact a tax professional or the Internal Revenue Service at 1-800-829-1040 or www.irs.gov.
Enjoy the new year in your new Chester County home!
