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What’s on your holiday wish list? How about $8000 for a new home?
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I hope he buys a new shirt with his $8,000.
Well, I can honestly say I did not think I would be revisiting this topic so soon; nor did I believe our government could work so quickly. I am referring, of course, to the extension of the tax credit for first-time home buyers, which was swiftly enacted this past week. The bill essentially negates the previous tax credit deadline of November 30, by which new home buyers needed t o close on their purchases, and pushes it out to July 1, 2010 (purchases must be made by April 30, 2010).
Not familiar with the tax credit? Perhaps it is time to come out from under that rock.
In a nut shell, first-time home buyers are eligible for a tax credit of 10% the purchase price of a new home, with a maximum credit of $8000. For example, if a FSHB purchases a $50,000 home by April 30, 2010, they will receive a tax credit of $5,000. That’s a lot of Ramen noodles, dear renters; time to ditch the lease in favor of a mortgage. There are income restrictions associated with this incentive, so please speak with your tax advisor concerning specific questions.
But wait, there’s more! This time around, the government did not forget about current home owners, who represent a large pool of the real estate market. Current home owners, who are looking to move, are now eligible to receive a tax credit of up to $6500, so long as they have occupied their primary residence five of the last eight years. What does that mean, exactly? Let’s say you lived in your home for five years, but sold it two years ago and have been renting since. You would still qualify for the tax credit if you purchased a new home now, since you lived in your previous home for five of the last eight years. Make sense?
This tax credit extension will not only continue to bolster a slumping economy, it will also give a surge to the Twin Cities’ real estate market, which normally slows down drastically during the long, dark winter months. It seems the sugar plum fairies will be dancing a little early this year.
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