Cover story: Get moving to buy with tax credit

Moving from renting to owning and from owning one home to another involves following a timeline that must match the end of a lease or the coordination of moving dates. This year, movers who want to take advantage of the federal tax credit for homebuyers face a new constraint.

To qualify for the credit, buyers must have their contract signed and accepted by April 30. Settlement must take place by June 30.

The process of applying for a loan, finding a Realtor, identifying a property to buy, negotiating the offer and reaching settlement sometimes can take months. If they haven’t already started, potential buyers intending to meet the tax-credit deadline need to begin the buying process immediately.

To qualify for the first-time homebuyer tax credit, buyers must meet these criteria:

• Have not owned a primary residence in the previous three years.

• Single taxpayers may earn up to $145,000; married taxpayers may earn up to $245,000. The credit phases out between $125,000 and $145,000 for singles and between $225,000 and $245,000 for couples.

• The tax credit is equal to 10 percent of the purchase price, up to $8,000.

To qualify for the repeat-buyers tax credit, the income limits are the same, but the buyers must meet these criteria:

• Have owned and occupied their primary residence for five consecutive years within the past eight years.

• The tax credit is equal to 10 percent of the purchase price, up to $6,500

In both cases, the tax credit is available for purchases of property valued at less than $800,000.

March: Meet with a lender

“Honestly, in order to meet the deadline, buyers should be looking for a house right now,” says Kelvin Carvana, renovation and construction finance manager for Monarch Bank in the District. “The market will naturally pick up in March anyway, but with the tax credit incentive and all the snow causing cabin fever, the competition for homes will be massive.”

Mr. Carvana says potential buyers should go to a lender before they do any home shopping so they know what they can afford.

“A preapproval for a loan can be given within 20 minutes or so if you go to a lender with an automated underwriting system,” Mr. Carvana says. “If someone is approved for a loan, we can generate a preapproval letter, and they can begin shopping for a home with confidence.”

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