Tax credit is extended into 2010

Q: I understand that Congress and the president have now passed a law that gives a tax credit to people who buy a house even if it's not their first home. Since we already own a house and are looking into buying a larger place, I'm wondering if we qualify. And how much time do we have to take advantage of this? -- Jayne C., Las Vegas

A: As you suggest, it was great news for all of us in the real estate profession and for potential homebuyers when Congress and President Barack Obama acted earlier this month to extend the existing tax credit for first-time homebuyers into mid-2010.

I was even more pleased to see them expand this successful tax credit by offering it to so-called move-up buyers like you.

Had the federal government not acted, this popular tax credit of up to $8,000 for first-time homebuyers would have expired on Nov. 30.

Statistics from the Internal Revenue Service, the National Association of Realtors and others have shown that this tax credit has helped thousands of Nevadans and hundreds of thousands of Americans buy their first home. It has had a huge impact on the local and national housing markets -- and on the overall economy.

According to recent IRS figures, irs.org, 20,222 Nevadans sought the credit for first-time homebuyers in filing their 2008 taxes.

I suspect a large percentage of these buyers may not have purchased a home if not for the tax credit. That was the conclusion of a recent report by the California Association of Realtors, which surveyed hundreds of first-time buyers in California and found that about 40 percent of them would not have bought homes this year without the tax credit.

Back to your situation, the answer is that you might very well qualify for a $6,500 tax credit if you sign a contract to buy a new home before April 30, 2010.

Here's what this expanded and extended tax credit now offers:

A tax credit of up to $8,000 for first-time homebuyers who sign a binding contract on a home before April 30, 2010, and close on their home by June 30, 2010.

A tax credit capped at $6,500 for homebuyers who have owned a home for five consecutive years within the previous eight years. As with first-time buyers, repeat homebuyers must sign a binding contract on a home before April 30, 2010, and close on their home buy June 30, 2010.

Expanded eligibility requirements raising the annual income limits 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.

A relatively generous purchase price cap making the credit available for homes costing up to $800,000.

A one-year extension of the credit for members of the armed forces and others away from home on extended duty.

To guard against fraud, the proposal adds an age requirement, requires corroborating information to be filed with a tax return claiming the credit, and gives the IRS greater authority to deny the credit based on information reported by the taxpayer on prior returns.

So, if you have owned your home for at least the past five years and if you make less than $225,000 per year as a couple, you should be able to take advantage of this tax credit if you close on a new home before June 30.

I encourage you to take full advantage of this while you can.

For more information, consult a Realtor or visit lasvegasrealtor.com.

Sue Naumann is the president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for nearly 30 years. GLVAR has nearly 13,500 members. To ask her a question, e-mail her at ask@glvar.org. Questions may be edited for space and clarity. For more information, visit lasvegasrealtor.com.