First -time homebuyers Tax Credit

[Joselyne Muszynski]

First-time homebuyers must close by Nov. 30 – contract not enough

WASHINGTON – April 24, 2009 – If first-time homebuyers wait until November
to sign a sales contract, it’s probably too late to get the $8,000 tax
credit. To qualify, buyers must close before Dec. 1 – a signed contract is
not enough. New construction should be started by mid-summer to qualify.

According to the National Association of Realtors, a “home is considered as
‘purchased’ when all events have occurred that transfer the title from the
seller to the new purchaser. Thus, closings must occur before December 1,
2009 for purchases to be eligible for the credit.”

Noting that deadline, the National Association of Builders kicked off a
campaign notifying buyers that if they want the tax credit, they should plan
to sign a construction contact soon.

Mike Dishberger of Sandcastle Homes Inc. in Houston, Texas, says that
building a home from scratch can take anywhere from four to six months
depending on the floor plan and location. Assuming it takes the full six
months, first-time homebuyers should sign a new-home construction contract
no later than May 31, 2009.

While it’s possible to rush an existing-home sale and go from contract to
closing in only a few weeks, that schedule could cause a problem for
last-minute buyers who wait until November. If an onslaught of buyers hope
to beat the clock, title agencies and others involved in the closing process
could get backlogged during November, and the IRS does not consider “planned
closing dates” for the tax credit – only actual closing dates.

To qualify for the tax credit, home buyers must have not owned a home for
three years prior to the purchase and have a modified adjusted gross income
(MAGI) less than $95,000 for single tax payers and $170,000.