The Extended Home Buyer Tax Credit for 2009/2010 was just signed in to law.
I went to realtor.org, the National Association of Realtors web site for more information. Click to read the entire National Association of Realtors summary
Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Reading further, it says
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by tow additional factors:
- The price of the home.
- The buyer’s income.
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Interestingly, that seems to introduce a singularity into the home buying process. Assuming they otherwise qualify for the credit, buyers who are considering an offer of $806,500 to $808,000 will likely offer $800,000.
Because if they’re a first time homebuyer, they lose the credit if they offer > $800,000
Or put differently, an offer of $800,000 becomes an effective price of $792,000 to them. An offer of $800,001 becomes an effective price of $800,001 – $8,001 more.
Will be interesting to see how it all plays out.
I’m a Realtor with a strong mathematical background and NOT qualified to provide tax advice, so your Tax Advisor is the one to call to find out how the new law affects your purchase.