The $8,000 Home Buyers Credit Extended into 2010

First time home buyers and Homeowners who have lived in a current home five of the last eight years are eligible for $8,000 and $6,500 respectively in income tax credits. To take advantage of the credit, you must have a binding contract by April 30, 2010 and must close by June 30, 2010.

The $8,000 credit is available for first time home buyers ($4,000 for married couples filing separately) and $6,500 ($3,250 for married couples filing separately). First time home buyer means that you have not had an interest in a principal residence for three years prior to the purchase.

Income limits have been increased to $125,000 for singles and $225,000 for married couples. There is an additional phase for the next $20,000 in income with a reduced credit.

Homes up to $800,000 are eligible for the credit and yes this is a credit, not a deduction to you income. You will receive money back from the government if you owe less taxes than the value of the credit. So, if you owe $2,000 in income tax and you take the full $8,000 credit, you will get a check back for the difference – $6,000.

If you are planning to buy real estate in Daytona Beach, or anywhere else in the country in the next year, it makes sense to take advantage of this credit. There is no guarantee that it will be extended, especially if the economy is show signs of recovery in the early part of 2010.

Couple the tax credit with low interest rates, great affordability of homes and prices stabilizing and it may be your best time to buy. The National Association of Realtors (NAR) is estimating about 2.6 million homes will be purchased using the credit. Will you be one of them?