As a Realtor, I get asked a lot of questions.
They range from, “What were they thinking when they installed the bathroom here?” to “Won’t people just make us an offer, even if we list our duplex at a higher price?”
I don’t know the answer to the first question. And the answer to the second is usally no.
But these days, the question I get asked most often is “Does a duplex qualify for the $8000 first time home buyer tax credit?”
And while I’ve discussed it here before, then answer was and is yes.
For the record, multifamily homes like triplexes, four-plexes and apartment buildings qualify too. However, the property must be used as your principal residence. It’s also important to note you can only get credit for the part you live in.
The credit has been structured so that any first time home buyer who has a binding purchase agreement in place by April 30, 2010, can receive up to 10 percent of the property’s purchase price, not to exceed a total of $8000 in the form of a tax credit.
Since only one half of the duplex would be used as your principal residence, you can only use the value of one half of the property to qualify.
For example, if you pay $160,000, your half would be worth $80,000. If you buy a duplex for $100,000, however, your half is worth $50,000. Your tax credit would then be 10 percent of your half , or $5000.
The same would be true if you bought a four-plex for $200,000 and lived in one of the units. The value would again be $50,000, giving you a credit of $5000.
Of course, to receive this credit, you must not have owned a home in the past three years. If you’re single, you can’t earn more than $125,000 a year and if you’re married, the two of you can’t earn more than $225,000.
Purchase agreements must be signed no later than April 30, and the transaction must close no later than 60 days after that.
Call me if you want to beat the deadline.