For those of you considering purchasing Boston real estate in the next few months and not sure if you qualify for the new homebuyer tax credit, pay attention. The rules have changed and even if you didn’t qualify for the credit last year, this year you may be able to take advantage of the tax credit. Here are the details:
1. Who Qualifies?
Eligible homebuyers now come in two categories: first-time buyers (who have not owned a residence in the last three years); and long-time residences of the same home (lived in same principal residence for any consecutive five-year period during the last eight years). The second group of buyers do not need to sell their existing home in order to take advantage of the credit, but will need to live in their new residence for at least the next three years to avoid penalty. It is estimated that 7 out of 10 current homeowners qualify.
2. When is the Deadline?
A binding Purchase and Sale agreement must be in place by April 30, 2010, with a closing date of no later than July 1, 2010.
3. What are the New Maximum Income Levels?
The maximum income levels have been dramatically increased. The Modified Adjusted Gross Income limit is now $125k for singles and $225k for couples.
4. Has the Credit Amount Changed?
Not for first-time homebuyers. For first-timers, the maximum credit of $8,000 is still in place. For long-time residents of the same principal residence the full credit is $6,500. Buyers will only incur the penalty of repayment if they sell their new home within 36 months of purchase. It is also important to note that the purchase price of the home cannot exceed $800k.