Misconceptions About the First Time Home Buyer’s Tax Credit
First of all, don’t forget that this credit is not going to last forever.
The DEADLINE to get the credit is APRIL 30, 2010 (You must have your new home under contract by that date, i.e., a binding sales contract, and CLOSE by the end of June). So if you are going after a short sale, you may lose out given what we know about how these transactions get delayed.
A misconception is the amount of the credit for first time home buyers.
Folks often think it is an automatic $8000. Buy a $60,000 condo and you get a credit of $8000.
BUT, the credit is UP TO $8000 based on the purchase price of the home, with the credit being 10% of the purchase price.
THIS IS A CORRECTION TO MY ORIGINAL POST (thanks to a recent reader) So an $80,000 purchase yields a credit of $8,000, depending, of course on income (there are limits in the plan) and your personal tax situation.
Another important point is the ARM’S-LENGTH TRANSACTION – you can read more about this in an article by a friend of mine, MISSY CAULK, in Ann Arbor, Michigan (It must be an Arms-Length Transaction to Claim the Tax Credit). BTW if you are looking to by OR sell a home in Ann Arbor, Missy is THE REAL ESTATE AGENT to call. Tell her I sent you!
READ MORE about the first time home buyer’s tax credit and commonly asked questions.
All content copyright © 2010 Jeff Dowler “The California Relocation Dude”