If you are currently a renter, the IRS is urging you to reconsider your living arrangements.
According to IRS officials, time is running out if you’d like to take advantage of the First-time Homebuyer’s Tax Credit.
In order to take advantage of the credit, buyers must close on a home before Dec. 1.
“There are almost always last-minute hang ups in the home buying process, so if you want to buy a home and take advantage of the tax credit, you should get started now,” said Mark S. Green, IRS spokesperson. “Looking at the current market prices plus the $8,000 tax credit, if you are planning to buy a home, now is the time to do it.”
According to Al Patisaul, a mortgage loan officer, closing on a home could take a while.
“The process to purchase a home could take up to about a month. In this market with so many homes that are being sold as foreclosures, sometimes getting a clear title could make the process longer,” said Patisaul of The National Bank of Georgia in Gainesville.
Buying a home isn’t as simple as picking out a house and signing on the dotted line.
“A potential homebuyer should get with a seasoned, professional mortgage lender to get prequalified and counseled on the steps of the loan process. The potential buyer should have good credit, job history and some liquid assets,” said Patisaul.
“Once it is established that they would qualify for a home, I would recommend (that the buyer) get with a good Realtor that understands how to work with HUD, Fannie Mae and bank-owned homes.”
In order to qualify for the first-time buyers credit, purchasers must not have owned a primary residence in the past three years. If the buyer is married, the same stipulation applies to the spouse. If the homebuyer has constructed a home, the tax credit is still applicable, however the closing date is considered to be when the owner first occupies the residence.
Taxpayers can claim 10 percent of the purchase price, up to $8,000 for individuals, or $4,000 for married couples filing separately. The tax credit begins to phase out for filers whose adjusted gross income is more than $75,000 or $150,000 for joint filers.
The tax credit was originally approved in 2008 and then modified in 2009 under the American Recovery and Reinvestment Act. A tax credit up to $7,500, is available for first-time homebuyers who purchased their home in 2008. That credit must be repaid in 15 equal, yearly installments beginning in 2010. The credit for 2009 homebuyers doesn’t have to be repaid, unless the owner stops using the home as their primary residence within three years of purchase.