The extension of the tax credit for first-time home buyers is good news for people who aren’t able to close on a home before Nov. 30, the original deadline for buying a home. Here’s what the extension could mean for seniors who may be considering buying a home with the proceeds from a HECM reverse loan.

Who Can Claim the Tax Credit?

The extension allows first-time home buyers to claim the tax credit of up to $8,000 on their income tax return. People who have not owned a home in the previous three years qualify for the tax credit. Additionally, people who already own a home and have lived there for five consecutive years of the past eight may be eligible to claim a tax credit of up to $6,500. You must purchase the home as your primary residence to qualify.

There are income restrictions on who can apply for the home buyers tax credit. The credit phases out for single tax filers who earn an adjusted gross income (AGI) of $125,000, up from $75,000. It phases out for joint tax filers who earn $225,000, up from $150,000.

Tax Credit Date of Expiration

To qualify for the home buyers’ tax credit you must enter a purchase agreement on a home by April 30, 2010, and close on it by June 30, 2010. The credit cannot be claimed for vacation and investment properties, or for homes that cost over $800,000.

HECM Reverse Mortgages

If you currently own a home and are considering using a Home Equity Conversion Mortgage (HECM) to relocate, talk with a reverse mortgage counselor to see if you qualify for the extended tax credit. The HECM program allows proceeds from reverse mortgages to be used to purchase another home as long as it is your primary residence. You can compare reverse mortgage quotes here.

This entry was posted on Monday, November 9th, 2009 at 8:01 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.