Even though the First-Time Homebuyer Tax Credit deadline is November 30th, the real deadline is upon us. That’s because the November 30th deadline refers to the closing date. Since most home purchases take between 45 to 60 days between contract signing and the closing date, you need to start house hunting in earnest in order to take advantage of this tax credit.
Qualifying taxpayers who buy a home by November 30th can get up to $8,000, or $4,000 if married filing separately. Even better news — this credit does not have to be repaid as long as the home remains the main residence for 36 months after the purchase date.
Taxpayers can claim 10 percent of the purchase price up to $8,000, but the credit amount starts to phase out for taxpayers whose modified adjusted gross income (MAGI) is more than $75,000 ($150,000 filing jointly). If you do qualify for this tax credit, think about how you want to use it. You can use it towards a nice tax refund – or – use the benefit of the tax credit to make a Roth IRA conversion if eligible.
Technically, you don’t have to actually be a first-time homebuyer to qualify for this credit. If you did not own any other main home during the three-year period ending on the date of purchase, you will be considered a first-time homebuyer.
One side note for those who purchased homes between April 8, 2008 and December 31, 2008 – you do not qualify for this tax credit, but you may qualify for a different tax credit which amounts to 10 percent of the purchase price up to $7,500 ($3,750 for married individuals filing separately). The big difference is that this tax credit must be repaid in 15 equal installments over 15 years beginning with the 2010 tax year.
With the success of the First-Time Homebuyer Tax Credit program – over 1.4 million homebuyers have used this credit so far – there is talk of extending the November 30th deadline. However, Congress has yet to make a decision on an extension. In the meantime, good luck house hunting! If you would like more details on this tax credit and to see if you qualify, visit www.irs.gov.