Four weeks from today, an important tax credit for home buyers will come to an end. On April 30, 2010, the deadline for “The Worker, Homeownership, and Business Assistance Act of 2009,” will be realized, one that requires people to sign a home purchase agreement in order to receive credit from the federal government.
Deadline Looms
Under the terms of the agreement, you don’t have to close on your home until June 30, but you must have a purchase agreement in place dated April 30 or earlier. Although the act was extended and expanded last November, Congress is not expected to authorize an additional extension. Then again….
Home buyers can qualify for a credit for up to $8,000 as long as they have not owned a primary residence at any point during the three years up to the date of purchase. That act was later amended to allow long-term residents to take a credit of up to $6500 as long as they owned a home for five consecutive years in the previous eight years.
Check the IRS guidelines to see if either one of these credits apply to you; certain income restrictions apply.
IRS Form
Under the terms of the act, qualifying buyers can claim credit on either their 2009 or 2010 tax returns. The IRS has developed a document–Form 5405, First-Time Homebuyer Credit—to use when filing your taxes.
Please note that if you purchased a home before Nov. 6, 2009, there is a newer version of the form that you must use.
The tax act was meant to stimulate home sales, but its overall effect isn’t yet known. In some markets sales have increased while home prices have stabilized, but other factors such as an improving local economy may have weighed in. Look for more detailed analysis this summer concerning the effectiveness of the act.
Housing Market
Finally, if Congress and President Obama remain worried about the housing market, expect that some sort of incentive to be rolled out or the act extended. 2010 is a mid-cycle election year and the Democrats already know that they will be losing dozens of seats over ObamaCare.
A lousy housing market could fuel calls for a changing of the guard by angry voters this November unless the economy receives additional federal stimulus.
Adv. — Visit SayLending.com to obtain information about mortgages and other lending options.
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