There’s good news if you put plans on hold to purchase your first home because you thought you’d missed the boat on the First-time Homebuyer Tax Credit.
The credit was set to expire on Dec. 1, but the federal government has extended the credit through April.
"The maximum credit amount still remains at $8,000 for a first-time homebuyer — that is a buyer who has not owned a primary residence during the three years up to the date of purchase," said Mark Green, an IRS spokesman.
After becoming engaged in September, Amy Arrington and Brandon Truelove say the tax credit inspired them to begin the search for their first home together.
"If we don’t get the credit that wouldn’t stop us from buying a home," Truelove said. "But when we found out about it, it got us looking. It really comes down to us finding the perfect house."
The extension of the credit will give more potential homeowners like Arrington and Truelove time to take advantage of the current "buyers market."
"It’s still a buyer’s market because we’re still going through foreclosures," said Tommy Howard, Norton Agency general manager. "We have seen a slight uptick in the average price of sold homes, but now is still a great time to buy."
In April, Howard said the average price of a home sold in Hall County was $149,000. Now the average price is around $170,000.
Just as the original tax credit helped boost home sales for first-time buyers, Howard expects the extension to have the same effect.
"We have seen an increase in first-time homebuyers. I think for the people who were on the fence about buying a home, the tax credit gave them the incentive to go ahead," said Howard.
"We saw a surge over the last three or four months and an increase in sales volume. In November, we saw a gradual decline — possibly because most people thought that they’d missed the opportunity to take advantage of the tax credit. It typically takes around 30 days to close on a home, so some potential buyers possibly thought that they didn’t have time."
Along with the extension comes a few additional guidelines. For example, the modified adjusted gross income for taxpayers eligible for the full credit was raised to $125,000 for an individual or $225,000 for joint filers. The new income limits apply only to homes purchased after Nov. 6. For homes purchased before Nov. 7, the income limits remain at $75,000 for an individual or $150,000 for joint filers.
The extension also provides for a "long-time resident" credit. In order to qualify for the long-time credit, a homebuyers must have "owned and used the same home as a primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence."
There are also a few new guidelines — no credit is available for homes that cost more than $800,000, purchasers must be at least 18 years old and dependents are not eligible to claim the credit.
Although some of the guidelines may seem extreme, IRS officials say they are necessary.
"Unfortunately, whenever you have a tax credit there will be some who take advantage," said Green. "The new guidelines are designed to help cut down on the filers who are trying to use the credit for their own fraudulent gain."