Clarifying the Tax Credit

It’s no secret that I’m a big college basketball fan, and for me March Madness is the best sporting event, period.

The NCAA college basketball tournament draws many viewers and listeners making it ripe for advertising. This year the National Association of REALTORS® is running an advertising campaign pushing the merits of the Home buyer tax credit. Unfortunately there seems to be some confusion about the credit and the ads.

1) “Extended” does not mean another extension, it refers to the extension to April 30th for contracts that are closed by June 30th.
2) “Expanded” is referring to the expansion to people that have owned their home and lived in it for at least 5 consecutive years, who are now eligible for a tax credit of $6,500.
3) “Expansion” also is referring to the fact that there are more homebuyers eligible since the income limits were raised to incomes up to $125,000 for single tax payer and for married couples with incomes up to $225,000.
4) The $8,000 tax credit is for first-time home buyers only. For the tax credit program, the IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase.
5) The tax credit does not have to be repaid unless the home is sold or ceases to be used as the buyer’s principal residence within three years after the initial purchase.

These have come up as questions in the last couple of days, and I do advise that you consult a tax professional if you have questions or if they are on how to get the money from the IRS go to their site.

Comments, questions, experiences are always encouraged.