Retirees Looking to Downsize Take Advantage of Extended Tax Credit

The Extended Tax Credit had implications that you had to move-up to a more expensive home but nothing could be farther from the truth.

Whether you move-up or move-down, the extended tax credit is available to just about everyone. This is especially enticing to retirees looking to downsize from the spacious to the more comfortable less expensive home.

Homebuyers must place a contract on a home before April 30, 2010 and close by June 30, 2010. The tax credit is for 10% of the purchase price up to a maximum credit of $6,500 for joint filers and $3,250 for those filing separately.

Income limits have also been raised; single homebuyers are now able to earn up to $125,000 and still qualify for the full credit while a married couple is able to earn up to $225,000. A phase-out applies to higher incomes for singles up to $145,000 and for married couples up to $245,000 respectively.

Here are the guidelines for all homebuyers claiming the extended tax credit:

• First-time buyers, defined as those who have not owned a home in the past three years can qualify for an $8,000 rebate. You will not be able to get use of this cash up front because of the overwhelming fraudulent activity that’s occurred with the $8,000 Tax Credit. You can either apply the credit on your tax return or wait until the IRS verifies all the documentation and forwards a check to you.

• Current Homeowners who have owned and occupied a residence for at least five years out of the past eight years are able to claim a $6,500 tax credit with the stipulation that you must close on the purchase of your home by June 30th.

• There are no requirements for current homeowners to sell their home to get the $6,500/$3,250 tax credit

• You must remain in the new residence for a minimum of 36 months. If you sell before then you will have to repay the tax credit

• The purchaser cannot be a dependant of the home seller

• The cost of the new home may not exceed $800,000.

An equivalent incentive that makes the tax credit even more enticing is the mortgage rate; the mortgage rates are still below 5 percent. For all those who’ve been sitting on the fence mulling over the thought of purchasing a new property this is good motivation to call a realtor – quickly because that April 30th deadline is approaching.

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