Home tax credit a lift for economy

By John Adams

For the AJC

If you are an existing homeowner, or even a recent homeowner, your government has a big-ticket stimulus package just for you.

It’s called the Repeat Buyer Tax Credit, and it’s already been signed into law. In a nutshell, if you have owned your home for the past few years and now plan to buy a replacement personal residence, you may be getting a tax-free check for $6,500.

Thanks primarily to Georgia’s U.S. Sen. Johnny Isakson, the original First Time Home Buyer Tax Credit has been extended to repeat buyers, effective just a few weeks ago. Now it applies to many “move-up” buyers who are buying a new or replacement house. Here are the details:

● To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the past eight years. So even if you rented or lived with family for the past 35 months, you might still qualify if you owned and occupied your previous home for five years.

● The tax credit is equal to 10 percent of the home’s purchase price, up to a maximum of $6,500. A quick check of the Georgia MLS Web site showed few livable homes for sale at less than $65,000, so you can plan on maxing out this credit.

● The credit applies only to homes priced at $800,000 or less. This is a new limitation on the old credit, but it will affect relatively few sales.

● The credit does not have to be repaid, provided you own and occupy the purchased house for at least 36 months. If you move before that anniversary, the entire credit will be billed to your tax liability.

● Even though the money is called a “tax credit,” you won’t have to wait until April 15 to get the money. Because it is a “refundable” credit, you can request a check as soon as the closing is complete.

● Under certain circumstances, your credit may be used to pay some or all of your closing costs and down payment expenses. Check with your lender for details.

● This new credit is available for new or resale homes purchased after Nov. 6, and you must close on or before April 30. If a binding sales contract is signed by April 30, the purchase qualifies provided it is closed by June 30.

● Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit. A phase-out of the credit applies to those with higher incomes.

This incentive should prove to be a powerful motivator to encourage repeat home buyers to make their move. Low home prices, great interest rates, and a “cash back” credit may provide the stimulus this market needs to sustain our slow recovery.

For more detailed information, visit my Web site at money99.com.

John Adams is a broker and investor. He answers real estate questions on radio station WGKA-AM (920) every Saturday at noon. For more real estate information or to make a comment, visit www.money99.com.