$8,000 BUYER TAX CREDIT AMENDED TO INCLUDE $6,500 FOR REPEAT BUYERS

Seems like buyers are once again gearing up to cash-in on the buyer tax credit. 

Your offers must be accepted by 4/30/2010 and the loan must close no later than June 30th, 2010.  Don't wait till last minute, because it would be a shame if you miss it by 2 days because everyone was so busy the loan couldn't get closed in time.  Find a home early!

Can you use it for your down payment?  No.  It's a credit you apply for after you buy the home.  You can't get it ahead of time, as it's a credit to the income tax liability you have so until you do your Federal Income tax return you will not know how much of the tax credit you're intitled to. 
Let me explain.....

You buy a home in April.  You're a 1st-time buyer or haven't owned a home in the last 3 years.  You buy a home for $100,000.  You qulaify for the max, which is 10% of the sale price UP TO $8,000.

You purchas the home, then file your 2009 income taxes.  If you would end up owing the IRS $2,000, because you can claim the tax credit, you would get $6,000. That's the $8,000 tax credit, less $2,000 you owed in income tax.

If you would be getting a refund of $2,000 in income taxes, with the tax credit you would end up getting $10,000.  That's the $2,000 you would get plus $8,000 tax credit. 

Now if you can't buy a home in time to file your taxes, you can amend them  right away and should get the credit pretty fast.

Say you're not a 1st-time buyer?  If you have owned your home for 5 of the last 8 years, you could qualify for up to $6,500 as a repeat buyer.

One exception to using the credit to buy a home:  You can't GET the credit, but in very few instances, depending on where you are buying, there may be HUD approved down-payment provider that would borrow it to you till you get the tax credit.  Here in LaCrosse, Wisconsin there aren't any approved providers.  99% change you can't find one in your area, so probably no chance of borrowing against the tax credit.  It's still worth checking out just to make sure it's not available in your area.

CNBC had someone on NBC's Today show telling people they can use it for the down payment.  I hope this comment didn't get anyone's hopes up.  They also said you can use the $6,500 to buy investment properties.  WRONG!  You could buy a rental property if you were going to occupy it.  Then you can only claim the credit against the portion you are occupying.  Say you buy a duplex for $140,000.  You can claim 10% of $70,000 (half of the $140,000 sale price) for $7,000 max credit, or $6,500 for repeat buyers. 

I've done a lot of research on this, and have researched a lot of scenarios, so if you have questions about the $8,000 or $6,500 tax credit for homebuyers, just give me a call or send me an e-mail.

I'm here for you!