Thursday, November 05, 2009

South Bay-Beach Cities:Home Buyer Tax Credit Extended

There is good news and bad news for South Bay-Beach Cities home buyers.....

Looks as if the Home Buyer Tax Credit extension  is almost official as the House, on a vote of 403 to 12,  passed  the extension of the home buyer tax credit.  The only thing it needs to be law is  President Obama's signature. The  new version of the tax credit has been expanded and extended. 

The tax credit bill will be extended through April 30, 2010, with a 60-day extension if a  contract is in place prior to the deadline. so technically you have to be in escrow no later then April 30, 2010 to take advantage of the credit.  First-time home buyers are eligible for a tax credit of up to $8,000.  An addition to the law allows existing homeowners  who purchase a new  primary residence ( not a second  or vacation home)will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years.

  The good news for our South Bay-Beach Cities real estate market is that income requirements have been expanded to $150,000 for single buyers and $225,000 for joint filers.  The bad news is that the  qualifying purchase price of the home is capped at $800,000.

Additional provisions  in the bill  allow taxpayers to claim the credit on purchases completed in 2010 on their 2009 income tax returns.  In order to keep investors from using the credit the legislation states that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase. However if they sell in less then 36 months the credit must be repaid to the government.   This requirement is waived for active duty military personnel who move due to a military order.

 Manhattan Beach and Hermosa Beach will  probably not see a lot of buyers use the provision because of the cap on the price of a home.  However other South Bay Cities may well see an increase in sales from folks who have been undecided about whether to purchase a home now or wait until later next year.

 I don't know if the new version of the law is retroactive for people who didn't qualify under the old income requirements but  would qualify under the amended law.  It might be a good idea if you purchased a home under $800,000 in the last 4 months and meet the new income requirements to check with you tax adviser.

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