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Time running out for homebuyer tax break

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POSTED: April 9, 2010 10:03 a.m.
Members of the military can benefit from the homebuyer tax credit extension legislation, which has been extended to include sales until April 30.
“The homebuyer’s tax credit legislation has definitely spurred an increased interest in the real estate market,” said Pam Brandt, senior vice president at The Coastal Bank. “It’s generating hard-to-pass-up advantages to current homeowners looking to ‘step up’ into another home.”
Originally, the tax credit only applied to individuals with an income of $75,000 for single taxpayers and $150,000 for married taxpayers filing joint returns. The new tax credit extension and expansion includes individuals with an income up to $125,000 for single taxpayers and $225,000 for married couples filing joint returns. However, homes priced above $800,000 are not eligible for either the first-time homebuyer tax credit or the repeat homebuyer tax credit.
Current homeowners within the income guidelines will receive a $6,500 tax credit after purchasing a new home and new homeowners will still receive the original credit set at $8,000. In addition, President Barack Obama and Congress included special allowances for military service members in the new tax credit legislation.
“It’s important that we ensure that members of the military are provided with all the essential information they need to make a smart purchase, including the special rules that apply only to members of the military, the foreign service and the intelligence community,” Brandt said.
Congress acknowledged the unique circumstances surrounding members of the country’s armed forces by making exceptions that apply to both the $8,000 tax credit for first-time homebuyers and the $6,500 tax credit for repeat homebuyers.
“These special rules are especially beneficial to all military personnel looking for a new home and will not only help balance the fairness of the legislation, but also push the local real estate market in a positive direction,” Brandt said.
The military rules include an extension for one year beyond the current deadline of April 30, and an income expansion to qualified military service members who are ordered on a period of official extended duty. This includes any period of extended duty outside of the United States for at least 90 days during the period that began Jan. 1, 2009, and ends before May 1, 2010. The homebuyer tax credit applies to sales with a binding contract in place on or before April 30, 2011 and closed by June 30, 2011.
“We have a responsibility to spread the word to consumers that homebuyers do in fact have appealing alternatives in today’s changing market,” Brandt said. “If there were ever a time to consider purchasing a home, it would be now while such favorable incentives are available.”
Jennifer Mafera, a partner at HunterMaclean specializing in commercial and residential real estate law, said she agrees and added that the tax credit can help revitalize the housing industry and the economy at large. “The extension of the deadline and expansion to higher income families will hopefully not only give the sluggish housing industry a boost, but also trickle down to benefit other related industries and services such as home furnishings, appliances, landscaping services, home improvement, lawn equipment and so forth,” she said.

 

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