Homebuyer Tax Credit in 2010 – Who’s Eligible?

Part 3 of – see bottom for links to each post in the series.

I’ve made no secret about my opinion that there should not be a tax credit for purchasing homes – or cars or any other cherry-picked segment of the American economy. But … I called and emailed my Congressman and Senators and they voted for the credit. What I think no longer matters. What matters is how buyers in the Charlottesville area can takes advantage of the homebuyer tax credit.

Tax Credit: Who qualifies for the homebuyer tax credit?

First time homebuyers – those who have not owned a home for the previous three years.

“Move-up” homebuyers. Those who have owned a home and are selling their primary residence. Rather than refer to this segment as “move-up” buyers, I’m deeming them “lateral” or “trading down” buyers. I foresee that those taking advantage of the $6,500 tax credit will be those selling larger houses and trading down to more appropriate sizes for them.

What will be the impact on the Charlottesville real estate market? Unknown. Last year we saw a slight surge in activity based on the first time homebuyer tax credit. I suspect we’ll see some more of that in 2010.

But … if the primary reason you’re buying a home in Charlottesville is to take advantage of the tax credit – maybe you should ask yourself some more questions about your buying motivation.

Calculate Risk – Government Housing Support Update – this story is a must read to get a basic foundation on some of the government programs out there designed to prop up the housing market.

From NAR (no longer available)

Tax Credit information on RealCentralVA

HR 3458 – For our purposes, known as the “homebuyer tax credit act“

From the National Association of Realtors:

Who Qualifies for the Extended Credit?

• First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.

• Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

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.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit (no longer available).

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 for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors:
1. The price of the home.
2. The buyer’s income.

Price

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit (no longer available).

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Part 1- Quick Update on the Charlottesville Real Estate Market
Part 2 – Short sales and Foreclosures in Charlottesville
Part 3 – Homebuyer tax credit in 2010 – Who’s Eligible?
Part 4 – Strategic Defaults in Charlottesville – What will 2010 look like?
Part 5 – Green building trends in Charlottesville

Podcast of the full hour show and transcript.