Home buyer tax credit expires this week!
This week will be an important week for many home buyers and home sellers. This is the last week to get an offer accepted and still qualify for the Federal Home Buyers Tax Credit.
The difference between being $8,000 richer, in many instances, will rely on whether or not you will be able to find a home that you love and get the home seller to review your offer and get acceptance by April 30, 2010 – this coming Friday (5 days left!).
In and around Pasadena, the response time from home sellers on purchase contract offers usually runs a few days. California purchase contract, in fact, allows 3 days (unless changed by the realtor) for a response. So a couple of tips:
If you are a home buyer that qualifies for the tax credit and find a home that you are going to be writing an offer on this week, please ensure that your realtor tightens up the response time from a seller.
Write a letter to the home owner introducing yourself and why you love their home and want to purchase it and don’t forget to highlight in that offer letter that timing is of the essence.
READ MORE: Back to Basics – Home Buying Process Explained
Have your real estate agent contact the home selling agent (listing agent) and advise them that you, the home buyer, need an answer by the 30th if not earlier.
Remember, that many times, the response from the home seller will be a counter offer so make sure to build in time for that.
READ MORE: Pasadena Real Estate Guide
Just a quick reminder on what this home buyer tax credit is all about:
The benefit of a tax credit is that it’s a dollar-for-dollar benefit, rather than a “tax deduction” or reduction in tax liability that would only reduce $1,000 to $1,500 when all was said and done.
So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Even Better… It’s Refundable!
Remember, because it’s a tax credit, it’s refundable! That means a homebuyer can receive a check for the credit if he or she has little or no income tax liability.
For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
What are the Income Caps?
Single tax filers with incomes up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers with incomes of $145,000 and above are ineligible.
Joint filers with incomes up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers with incomes of $245,000 and above are ineligible.
What’s the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
If you or someone you know is in the process of purchasing a home, this is an important week to take action – feel free to forward this article to anyone who it might benefit. And give me a call with any questions – the clock is ticking and the deadline is Friday!!
PasadenaViews Real Estate Team
Real Estate Agents