I am getting a ton of questions from folks looking to buy a home in Pasadena about the $8,000 tax credit. Reason being? There are only a few months left for potential home buyers to take advantage of it.
We have talked about first-time Pasadena homebuyers—those who have not owned a home for at least three years—may be eligible for the $8,000 federal tax credit, but the window of opportunity is closing rapidly. To qualify for the credit, the buyer must close escrow by midnight on Nov. 30, when the tax credit expires. Pasadena home buyers hoping to take advantage of this benefit need to start house-hunting NOW, as the buying and lending processes takes time.
Some things to take into account when considering a home purchase:
- Finding the right house can take some time, so REALTORS® recommend home buyers start looking for a home as soon as you are able and ready to purchase. Home buyers also should build in extra time to accommodate the lending process, which is taking approximately two weeks longer to process this year compared with last year.
- The tax credit is equal to 10 percent of the purchase price, up to $8,000, subject to income limits. Single taxpayers are eligible if their modified adjusted gross income is $75,000 or less, while married taxpayers filing jointly must have a modified adjusted gross income of $150,000 or less.
- Only primary residences are eligible for the federal tax credit, including new or existing single-family homes, townhouses, condominiums, manufactured homes, custom homes, and houseboats. Vacation homes and investment properties do not qualify.
- Purchases must be arm’s-length transactions, meaning the seller cannot be the buyer’s parent, grandparent, child, grandchild or spouse.
- Married people filing as such cannot claim the credit if either spouse has owned a primary residence within the last three years. However, unmarried joint purchasers may allocate the credit in any way they see fit, as long as it does not exceed the $8,000 maximum.
Questions? Let me know and we’ll post answers right here for you!
Photo courtesy of The Harriman Team