The federal government's first-time homebuyers tax credit has been popular with consumers purchasing existing homes, but it also can be applied to newly built houses, manufactured housing (also known as mobile homes) and even houseboats.
The rules for the credit are similar whether the buyers are getting a new or an existing home, but real estate experts say there are some differences buyers should understand.
"Subject to the same criteria as on a resale home, the credit does apply to the purchase of a new home," said Vincent Keegan, a real estate lawyer with Keegan & Associates in McLean. "The tax credit is up to $8,000 for 'first-time buyers,' those who have not owned a principal residence for the three-year period prior to the purchase, and $6,500 for 'repeat buyers,' those who have owned and resided in the same home for at least five consecutive years of the eight years prior to the purchase date."
Is it too late?
In order to get the federal first-time homebuyers tax credit, purchasers must have signed a contract by April 30 and closed by June 30 -- not much time to build a house. That does not mean however, that it is too late for first-time buyers to get both a newly constructed home and the credit. Some builders have homes in stock that are partially or fully completed or designs that can be built quickly.
"As long as we start the home by the end of January we will make a delivery date at the end of June," said Dee Minich, senior vice president of sales and marketing at K Hovnanian.
The timing for a deal involving new construction is critical, said Roy Kaufmann, a lawyer with Jackson & Campbell in Washington.
"If the person contracts to have a new home constructed, the critical date to qualify for the tax credit is the date the home is completed and the person can move into it as his/her primary residence," said Kaufmann, chairman of the D.C. Bar Association's Real Property, Housing and Land Use Section.
According to the Internal Revenue Service, a home construction contract qualifies as a binding contract. Provided the contract is entered into by April 30, the property is closed by June 30 and the home is occupied by or before June 30, the credit can be taken. To qualify, the home price must also be $800,000 or less, and the seller cannot be a relative.
"If a person wants to hire a contractor to construct on a lot already owned by the person, the person can take the credit, but the home is deemed 'purchased' on the date the person first occupies the house," Kaufmann explained. "Therefore, the person must move in by April 30 or by June 30, provided a binding sales contract was in force by April 30, 2010."