Extended tax credit applies to active military personnel
Q: In your (May 29) article regarding the federal homebuyer tax credit, you failed to mention if the military included the retired portion of the military. Also, what is considered a first-time homebuyer? My husband and I have paid off our home and were wondering should we qualify for the federal homebuyer tax credit, would we be a first-time homebuyer or would we qualify for the $6,500 rebate? -- Liz W., Las Vegas
A: These are all valid questions. Unfortunately, without knowing when you purchased your last home, how long you've lived in that home, how much money you make and how much the home you're looking to purchase is worth, I can't give you a definite answer about whether or not you qualify for a tax credit.
Here's what I can tell you.
At this point, only active members of the military -- including those serving in the intelligence and foreign services -- are eligible for the federal tax credits for first-time and repeat homebuyers.
These military members who were on active duty and out of the United States for 90 days during any part of 2009 get an additional year to buy their homes, extending the tax credit for them to May 1, 2011.
Since you mentioned that you paid off a previous home, you would probably not be considered a first-time buyer. To qualify as a first-time homebuyer, the buyer or his/her spouse may not have owned a residence during the three years prior to the purchase.
You may, however, have been eligible for the $6,500 tax credit extended to repeat homebuyers.
Before we go any further, you should also realize that unless you're an active member of the military meeting these requirements, you needed to sign a contract to buy a home by April 30 to be eligible for the tax credit. You also needed to close on that purchase by June 30.
Members of the Greater Las Vegas Association of Realtors and others in our industry worked closely with Sen. Harry Reid and other congressional leaders in an effort to get that deadline to close on a home extended to Sept. 30. As of this writing, both houses of Congress had passed this extension, which was awaiting President Barack Obama's signature to become law, preserving nearly 200,000 transactions already in escrow.
In any case, when the federal government expanded and extended the tax credit last November, the law also:
Expanded the credit (capped at $6,500) beyond first-time homebuyers to those who have owned a home for five consecutive years within the previous eight years.
Increased the dollar limits of income for eligibility for both credits from $75,000 for singles and $150,000 for married couples to $125,000 for singles and $225,000 for married couples.
Limited the credits to homes costing $800,000 or less.
Extended the credit for an additional year for members of the armed forces and others away from home on extended duty.
People have also asked me if you need to repay the tax credit. Buyers do not need to repay the tax credit, if they occupy the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.
For more information on this topic, visit realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit. You can also consult a qualified local Realtor, call the GLVAR at 784-5000 or visit lasvegasrealtor.com.
Rick Shelton is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for 20 years. GLVAR has 12,500 members. To ask him a question, e-mail him at ask@glvar.org. For more information, visit lasvegasrealtor.com. Questions may be edited for space and clarity.
