RACI Newsletter

HOMEBUYER TAX CREDIT Q & A

Published on Mar 05, 2010

Since the Federal government has expanded and extended the Homebuyer Tax Credit, IAR has received several calls to the IAR legal hotline about specifics of the credit and the deadlines.  

Here are some of the most common questions received concerning the tax credit. Please remember that the Legal Hotline is available to assist principal or managing brokers and their designated agents between the hours of 9 a.m. and 5 p.m., Monday through Friday. Call 800-444-LISA

Q What is the new date by which my buyer must close in order to be eligible for the tax credit?

A One of the program guidelines for the buyer(s) to be eligible for the tax credit is that a binding purchase agree­ment must be entered into by April 30, 2010 and closing must take place on or before the end of the business day on June 30, 2010. Please note that there are a number of conditions, restric­tions and deadlines involved with the tax credit. You should advise your clients to thoroughly research the complete program requirements.

Q My buyer would like to take advantage of the tax credit but she makes a very nice income. Is there a limit on what a buyer can make and still receive the credit?

A Yes, single buyers with income above $125,000 and married couples with incomes above $225,000 may not qualify for the full tax credits. Those earning over $145,000 (single) and $245,000 (couples) are not eligible for the credit at all. Please note that another factor to be considered is the price of the home. Homes with a purchase price of $800,000 or more will not qualify for the tax credit.

Q I am working with a couple that is looking to buy and get the first time homebuyer credit. The wife has never owned a home before but the husband did own one which they just sold two years ago. Will that affect the credit?

A Yes, to qualify as a “first-time home buyer” the purchaser or his/her spouse could not have owned a home during the three years prior to the purchase of the qualifying home.

Q My buyer has a unique situation and is questioning whether he is eligible for the tax credit. Can you help me determine if he is eligible?

A The legal hotline will not make a determination as to whether a buyer qualifies for a tax credit and we suggest that you as brokers and agents don’t either. You should refer your cli­ent to various sources of information about the tax credit and/or their own tax advisor for that sort of advice.

Q Since the new deadline of April is coming soon, should I be pro­viding my buyers with some kind of disclosure about the availability of the credit and the deadlines?

A The IAR Legal Department has drafted a “2010 Tax Credit Disclosure/Hold Harmless Agreement” form to be used by our members. This form is available at the IAR website, www.indianarealtors.com, under the Legal Library tab under the category “Forms”. This form was designed for agents and bro­kers to provide the necessary basic information concerning the tax credit and at the same time, provides protection for agents and brokers from possible liabil­ity.

Q Where can I send my client for more information on all the requirements of the tax credit?

A There are several internet sources for additional information on the tax credit. We suggest the following: www.homebuyertaxcredit.com, www.irs.gov, www.realtor.org. Of course, the prospective homebuyer can call either the IRS or their own tax advisor as well.