Details on the Home Buyer Tax Credit Extension

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Home sales got a needed boost because of the Obama administration’s $8,000 tax credit for first-time buyers. With the national economy and housing market still fragile, the government recently decided to extend the tax credit through June 2010.

The government also rolled out a new tax credit aimed at existing homeowners. Currently in effect, the $6,500 “move-up” tax credit would apply for eligible homeowners who purchase a new permanent residence in the coming months.

Housing experts hope the two tax credits can help the struggling housing market rebound in 2010.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers, told CNN after the bill’s passage.

Thousands of Americans have already taken advantage of the first-timers program, which defines “first-time” buyers as those who haven’t purchased a home in three years. There are also income restrictions — individuals who make more than $75,000 and married couples who clear $150,000 are not eligible for the first-timers program.

Meanwhile, existing home buyers who have considered upgrading or downsizing can take advantage of the new $6,500 tax credit. Purchasers need to have owned their current home for a stretch of at least five consecutive years in the last eight.

Individual buyers can’t have an adjusted household income exceeding $125,000; for joint filers, the threshold is $225,000. There are also a few other key components of the new $6,500 tax credit:

Home price cannot exceed $800,000.
The home must be the buyer’s primary residence, not an investment property or a second home.
Buyers can purchase several home types, including single-family, condominiums, manufactured homes and even house boats.
Those who purchase before Jan. 1 can claim the credit on their 2009 tax return or file an amended return for 2008.
Military members deployed outside the U.S. have until July 1, 2011, to close on a property. Deployments must have been for at least 90 days between Dec. 31, 2008 and May 1, 2010.

To learn more about the $8,000 first-time home buyers tax credit extension and the new $6,500 tax credit for existing homeowners visit our blog.

Learn more about mortgage loans at Mortgage Loan Place. We specialize in educating consumers on all types of loans with an emphasis on FHA home loans and FHA refinancing.