Are You Eligible for the Homebuyer's Tax Credit?

Are You Eligible for the Homebuyer’s Tax Credit?
President Obama and Congress have extended the first-time buyer tax credit until April 30, 2010. Qualified first-time homebuyers will receive a tax credit of $8,000, and the plan has been expanded to homeowners who have lived in their existing home for five years and are looking to relocate. These existing homeowners can receive a tax credit of $6,500. Homebuyers need to earn less than $125,000 ($225,000 for married couples) to get the full value of the tax credit. The tax credit phases out completely for those who earn over $145,000 ($245,000 for couples). In addition, the purchase price of the home has to be less than $800,000.

 Here are some other features that may prove helpful:

 (1) When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount.

(2) The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit.

(3) When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.