On November 6th President Obama signed a bill extending the first time homebuyer credit. This extension also added a provision for existing homeowners who have owned a home for 5 of the last 8 years to also qualify for a credit. Which makes sense, if the intent of the credit is to stimulate home sales why limit the credit to only those who have never owned a home before? By opening up the credit to those families needing a larger home than they are in or to those families wanting to downsize their home it will stimulate more people to make a purchase.
Some stipulations to claiming the credit were added but they are common sense. A copy of the settlement statement now needs to be attached to the tax return in order to receive the credit. The IRS requires a detailed receipt when donating used clothing to charity, most people donate a couple of hundred a year in used clothing why wouldn’t some kind of documentation be necessary to receive $8,000? And the homebuyer must be at least 18 to claim the credit. Makes sense what title company is going to close on a home to a four year old? Neither of these stipulations are difficult to fulfill and if it means you get $8,000 or $6,500 credited to your tax bill it is well worth it!
But the really cool part of this homebuyer credit is that if you close on your home in 2009 you can amend your 2008 tax return to receive the credit instead of waiting till April of 2010 to file your 2009 tax return and receive the credit. This really cool feature is also available for purchases in 2010.
The homebuyer credit is extended for homes bought before May 1, 2010. Not everybody qualifies for this credit you should check with your tax accountant to see if your Adjusted Gross Income (AGI) is in the phase out category. Not all homes are eligible for this credit, those homes valued at $800,000 do not qualify.
I am not sure where the money is coming from to fund this homebuyer credit but nevertheless it is available, so you might as well take advantage of it!