Tax credit incentives help drive the real estate market

On November 6, 2009, Congress agreed to extend the tax credit pro­gram for buy­ers and sell­ers. This very pop­u­lar pro­gram has been extended to June 30^th of 2010. Here is how it plays out.

For cur­rent home­own­ers that are sell­ing, you may qual­ify for up to $6500 in tax credit as an incen­tive to pur­chase a home. You must have owned and occu­pied a pri­mary res­i­dence for a period of 5 con­sec­u­tive years out of the last 8 years.

For first time home buy­ers, there is a tax credit limit up to $8,000. The pro­gram calls for a credit of 10% of the pur­chase price up to that $8000 figure.

So, if you are a first time buyer and and pur­chase a home for $80,000 or more and you owe $2000 in taxes, your credit will be $2000 and you will receive a check for $6000. If you are lucky enough to have a refund on your taxes com­ing, you ben­e­fit by get­ting both the refund check AND the $8,000. For exam­ple, if you have over­paid on your taxes and are due a refund of $1500 and your pur­chase of a home qual­i­fies for the max­i­mum return of $8000, you would receive money totalling $9500.

Of course, if you pur­chase a home that is $70,000, your credit would be $7000 and with the same sce­nario of owing $2000, you would be receiv­ing a check for $5000. The same thing works for the sell­ers except the limit is $6500.

There are income guide lines that state that sin­gle fil­ers up to $125,000 are eli­gi­ble for total credit and joint fil­ers up to $225,000 are eli­gi­ble for total credit.

Maximum pur­chase price is capped at $800,000.

Now, all con­tracts on a pur­chase need to be signed no later than April 30^th, 2010 and close no later than June 30^th, 2010.

Remember, this is a fed­eral pro­gram so if you are sell­ing in Mountain Home, you'll still get the credit if you buy in Sioux City IA, or any­where else (I'd choose Hawaii myself).

When con­sid­er­ing apply­ing for any of these tax cred­its, con­sult with your accoun­tant or tax pro­fes­sional for advice about your per­sonal cir­cum­stances and how it will impact you individually.

Keep in mind, this pro­gram is for home buy­ers who pur­chase a home for their pri­mary residence.

If you have any ques­tions about buy­ing or sell­ing real estate, don't hes­i­tate to con­tact me.

Gary L. Heimbach Associate Broker AR & IL

870.321.2766

Larry Black and Associates

© 2009 — 2010, Gary Heimbach. All rights reserved.