Federal Tax Credit for a New Home Purchase Ends Soon!
Tuesday, March 16th, 2010
The Federal Tax Credit for purchasing a new home ends soon. By law, the buyer of a new home must sign their contract to purchase by April 30, 2010, and close escrow by June 30, 2010. That means we are in the last 45 days for home buyers to qualify for the federal tax credit.
You will recall that the Federal Tax Credit offers first time home buyers up to $8,000 and repeat buyers up to $6,500 for the purchase of a new home. Legislators have continued to repeat “there will be no further extensions of this stimulus program.”
In earlier posts, I outlined the specifics of the tax credit, but there are a couple of points you should remember. First, this is a true credit against your next year’s tax bill. A tax credit applies dollar for dollar to your tax liability. If you owe the IRS $10,000 in tax liability and you are eligible for $8,000 of tax credit, your tax liability would be reduced to $2,000!
Second, this tax credit is fully refundable. This means if you owed the IRS $5,000 on your next tax return, and you are eligible for $8,000 in tax credit, then the government would send you the difference, $3,000, as a tax refund!
And third, this tax credit is applicable to the purchase of a newly constructed home or a resale home. The government is trying to stimulate economic activity with this tax credit. And, given today’s low mortgage interest rates and low home prices, your buying power may never have been stronger. This means you can get more home for your money today.
Taken all together, now is a great time to buy a new home! But, that time is quickly slipping away. You must act now if you want to take advantage of low prices, low mortgage rates and the federal tax credit for buying a new home!
