Tax credit available for Rhode Islanders looking to purchase a home.
On Friday, November 6, 2009, President Obama signed the Worker, Homeownership and Business Assistance Act of 2009, commonly known as H.R. 3548, extending the $8,000 tax credit to first-time homebuyers. What residents of Rhode Island might not know, is that you do not need to be a first-time homebuyer to get the tax credit.
Under H.R. 3548 bill, first-time home buyers may qualify for up to a maximum of $8,000. A “move up” or “repeat buyer” may qualify for up to a maximum of $6,500.
- The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase.
- The law defines a tax credit qualified “move-up home buyer “as a home owner who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.
The tax credit is equal to 10 percent of the home’s purchase price up to the maximum allowable total. Purchases of homes priced below $800,000 are eligible for the tax credit and must be utilized as the borrower’s primary residence. The home purchase must close on or before June 30, 2010. You must be in a enforcable binding agreement by April 30, 2010.
- Eligible properties include single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats.
- It is important to note that you cannot purchase a home from a family member, a spouse or your spouse’s family.
Income limits have been increased. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return.
Other provisions in the bill include:
- Requiring taxpayers to include documentation to prove that they purchased a home
- Requiring a minimum age of 18 to claim the credit
- Authorizing IRS to look at prior year returns and determine if a taxpayer is eligible for the credit
- Improving tax administration by increasing the number of electronic returns filed by return preparers
There are also other provisions for veterans within the bill:
- Ensures service members will not have to repay the first-time home buyer credit if they are ordered to deploy to a different location and, as a result, forced to sell their home within three years; and
- Extends for one year, to April 31, 2011, the deadline for taking advantage the first-time homebuyer credit for qualifying service members, so that certain service members stationed overseas can take advantage of the credit when they return.
- Ensures that certain payments under the Defense Housing Assistance Program (HAP) to assist military personnel selling a home that has declined in value are exempt from tax;
If you would like more information about the tax credit or would like to apply for a mortgage, please call or visit my website at http://www.mortgagemasterinc.com/lmckenzie.
Lynda Mckenzie
Mortgage Master, Inc.
NMLS#/137627/RI license# 137627
Direct: 401-524-9796
E-fax: 401-537-9156
E-mail: lmckenzie@mortgagemasterinc.com
RI Loan Broker 95000655 LBB01/ RI Lender License 2005 1876LLBo1
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