With mortgage rates at historic lows and some great deals on houses, you might be considering buying a new home. Most people think the government is only offering tax incentives to first-time homebuyers, but thanks to a new law enacted on November 6, 2009, assistance is now available to some repeat homebuyers as well.  If you have a primary residence that you have lived in for at least five consecutive years during the last eight-year period and you are buying a replacement primary residence (after November 6, 2009), you may qualify for a tax credit of up to $6500.  In order to qualify:

¨              You must enter into a binding contract to buy your replacement primary residence before May 1, 2010.

¨              You must close on that primary residence no later than June 30, 2010.

¨              Your replacement primary residence cannot cost more than $800,000.

¨              You must have a modified adjusted gross income equal to or less than $145,000 for a single filer or $245,000 for joint filers. The full credit will be available to taxpayers with modified adjusted gross incomes of up to $125,000, or $225,000 for joint filers. Those with modified adjusted gross incomes between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit.

¨              You must be at least 18 years old on the date that the home is purchased.

¨              If you have a spouse or co-buyer, they must also have lived in the same primary residence for five consecutive years during the last eight- year period.

¨              The credit is claimed using Form 5405, which you file with your original or amended tax return. For home purchases in 2010, you may be able to claim the credit on either your 2009 or your 2010 tax return. 

¨              Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit (binding contract by April 30, 2011 and close by June 30, 2011). 

¨              Note that if you do not remain in your replacement primary residence for at least 36 months, you will have to pay back the credit.

For more details or to answer any questions that you might have, visit http://www.irs.gov or talk to your tax preparer. 

And remember, if you are considering buying a home but aren’t sure if you can afford it, INFOTRAK’s mortgage calculators can help you understand how much you can borrow, what the mortgage payments will be, and the best home loan for your circumstances.

Have a safe, healthy and prosperous new year.