The real estate market was booming this year due to the exciting $8,000 tax credit offered to first-time homebuyers. Although, the opportunity has passed for most, the government extended the deadline for military personnel and their families, paying them back for their extraordinary service to our country.
“Qualified service members” now have until April 30, 2011 to sign a sales contract. They must finalize the sale by June 30, 2011.
The Internal Revenue Service describes “qualified” as any member of the armed forces, Foreign Service or intelligence community.
The extension went into effect because of the overwhelming amount of service members on active duty who would not be able to find a home before April 30, 2010.
The benefit comes with a couple of new rules and benefits.
- To qualify, service people must have served abroad a minimum of 90 days between January 1, 2009 and April 30, 2010.
- Former income limits have been raised. For a single-person buyer, the limit is $125,000. For a married couple, the limit is $225,000. Allowances might be made for some above the annual income.
- The potential home must be less than $800,000.
- Also new, repeat homeowners can take advantage of a $6,500 credit. The homebuyer must have lived in the previous principle residence for five consecutive years to be entitled to the credit.
- Sometimes, the government requires some of the tax credit to be repaid. However, qualified service members who have to move from a tax credit home due to leaving for duty are exempt from having to pay back the tax.
Accompanying the opportunity of the tax credit is the popular VA loan. Like the purpose tax credit extension, the VA loan provides extra relief for those wanting to be a homeowner.
So next year, not only can qualified service members receive the $8,000, they can also take advantage of the 100% financing, zero down payment, and $417,000 that the VA loan has to offer. Better yet, a service member does not have to worry about strict income standards or high credit score requirements, a prepayment penalty or private mortgage insurance fees. The VA loan is a stress-free process.
Contact a tax professional for further details about VA loans and other benefits for military personnel in the real estate market.
Photo thanks to Soldiersmediacenter under creative common license on Flickr.