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Service members have more time to tap tax credits

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Business,Patrick Crowley

To avoid shortchanging members of the military subject to long overseas deployments, Congress has given them more time to buy a house and still qualify for the federal government's homebuyer tax credits.

Military personnel also have fewer limits on how long they have to live in their new house before having to reimburse the credit -- a special deal also available to some employees of the intelligence community and members of the Foreign Service.

Qualified members of the military on official extended duty service have until April 30, 2011, to get a property under contract and until June 20, 2011, to close, according to Internal Revenue Service guidelines. For civilian buyers, the April and June deadlines are this year.

Realtor Trudy Severa of Long & Foster in Reston said there is another difference in the tax credit for military families.

"A nonmilitary buyer is required to remain in the home they purchase for a minimum of three years to avoid having to repay the tax," Severa explained. "For qualified members of the military, that time period may be shortened if they've been assigned official extended duty service outside of the United States as defined in the tax credit bill."

Military members and other federal employees serving or living overseas must, however, meet the first-time buyer criteria other citizens face, including:

»  The buyer has not owned a primary residence for three years or, in the case of the step-up credit, has lived in his or her residence for five consecutive years of the last eight.

»  The home being purchased cannot cost more than $800,000.

»  The buyer meets income guidelines: $125,000 single taxpayers, $225,000 for married taxpayers filing a joint return.

Realtor Sandra Sugar of Coldwell Banker Residential Brokerage in Bethesda says even though members of the military and others serving overseas have longer to take advantage of the tax credit, they should be prepared to buy because of tight supply.

"One of the hurdles Realtors are now facing is that there are fewer sellers than buyers," Sugar said. "To take advantage of the current housing climate, one of the first things they should do is get a preapproval letter from a lender."

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