The clock is ticking for first-time and move-up home buyers who want to take advantage of the free government money for qualified home purchasers. The original deadline of November 30, 2009 has been extended to April 30, 2010. That is the date home buyers must have an executed contract signed by all parties involved in the sales transaction. The next requirement is that the sale must be closed by June 30, 2010.
This could get dicey for procrastinators, as the big banks who have lobbied Washington to muscle out the independent mortgage industry, can sometimes take twice as long to get mortgage loans closed - especially when most of the deals will probably all occur during a six to eight week time frame. Also, lookey-loos and those that suffer paralysis by analysis will likely find attractive homes at attractive prices gone by the time they decide to make an offer.
As a reminder, income limits have been increased for this latest version of the government tax credit refund. Singles with modified adjusted gross incomes of up to $145,000 can qualify although phase-outs begin at $125,000. For couples filing jointly, the credit begins phasing out at $225,000 and modified adjusted gross incomes above $245,000 do not qualify.
Also, home owners who have lived in their current principal residence for 5 years can qualify for up to a $6,500 credit.
* Applies only to homes used as a taxpayer's principal residence.
* Reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar.
* Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
The credit is claimed using Form 5405, which you file with your original or amended tax return.
Many ask me if I think the refund credit will be extended. Honestly, I don't think so. With tax payers and tea party constituents exhausted with big government's continued waste of hard working American's tax payer dollars, I would be very surprised if the credit was extended into a 3rd act. Democrats and liberals are running for the exits from the Obama camp, and are likely to toot the horns of fiscal constraint to save their own political hides. That's why I would be very surprised if the tax refund will have the political support to continue beyond the April 30 executed contract deadline.