IRS confirms land contracts OK for new buyer credit
Most of you probably know that the new home buyer credit has been extended in several ways.
- The original credit from 2008 needed to be repaid but the credit for 2009 no longer required repayment
- The credit was extended into 2010. It is available to those who enter a contract by April 30 and close on their purchase by June 30.
- It can now be used to purchase a trade-up hous
- BTW, though it's called the new buyer credit, that doesn't mean you can never have owned a home. You can take the credit so long as you have not owned a home in the past three years
But there's another important provision that was recently clarified, making the credit available to more people. The original legislation was silent as to whether a purchase by land contract qualified for the credit, since title does not change hands until the installment payments are complete. This left a large number of people up in the air, because mortgages have become much more difficult to get. Some properties, and many people, don't qualify under tightened rules.
Recently, the IRS website now was updated to give specific information about clauses that must be a part of a land contract for the person to receive the credit, as well as to be able to deduct the interest and real estate taxes.
This is great news for a lot of people, including my elder daughter!
For more information, seee the IRS website.
Barbara McElroy is Associate Professor of Accounting and Head of the Department of Accounting and Information Systems at Susquehanna University in Selinsgrove, PA. Before beginning a career in academe, Barbara worked in both public and private accounting settings, and owned several businesses. She is particularly interested in the interaction of accounting and public policy. Barbara will discuss current events with the interest of students, faculty, and practicing professionals in mind.