Did you know there are two home buyer tax credits available right now?
I’m sure you’ve heard of the recently extended $8000 first time home buyer tax credit. But the second?
To quote Rodney Dangerfield, it “gets no respect”.
Maybe it’s because it doesn’t have a catchy, self-explanatory name for the media to latch on to. Instead, it’s often labeled by the rather cumbersome monikers of the “move-up” or “second time home buyer” tax credit.
But neither is exactly accurate. You don’t have to be either moving up or looking for your second home to qualify.
So what is it?
The tax credit, which is can be as much as $6500, is available to anybody who has owned and lived in the same home for at least five of the previous eight years prior to the purchase of their new home. In other words, repeat buyers.
And, like the first time home buyer tax credit, it can be used for any type of property you’re willing to label as your principal residence, including a single family home, duplex, triplex, fourplex, manufactured home or houseboat.
To qualify, single buyers can’t earn more than $125,000. Married buyers are capped at an annual combined income of $225,000. It is phased out past those income limits and dissolves completely for singles who earn more than $145,000 and couples who top $245,000.
While it’s likely that most repeat buyers have homes and duplexes they need to sell to be able to buy another, it isn’t necessary in order to qualify for the credit. The buyer simply needs to declare the new property his or her principal residence.
In recent weeks I’ve actually spoken with several potential sellers who are nearing retirement. They see this credit, when combined with the added incentives of bargain prices and low interest rates as an opportunity to get a better deal on their retirement property. For many, they are simply doing so a little bit early.
Like the first time home buyer tax credit, repeat buyers must have a purchase agreement in place no later than April 30, 2010, and close on the property before the end of June.