A new law could provide an attractive housing option for many families near and around many military bases and shipyards.

While the biggest federal incentive for homebuyers expired for most consumers on April 30, members of the military could have an additional year to buy a home and claim the homebuyer tax credit.

The law allows service members another year to buy a home and claim the credit if they served on official extended duty outside of the United States for 90 days or more at any time between Jan. 1, 2009, and May 1, 2010.

Those members have until April 30, 2011, to sign a sales contract, and until June 30, 2011, to settle and close on the home. Both the $8,000 first-time and $6,500 repeat homebuyer tax credits are included in the rule.

"Congress recognized that many service members may have missed out on the homebuyer tax credit due to being posted overseas," said Bob Jones, chairman of the National Association of Homebuilders. "It is only fitting that they be given another year to take advantage of this opportunity in appreciation of the sacrifices they have made serving our country."

Typically, homes that are sold or that cease to be used as a principal residence within three years of the initial purchase are subject to recapture of the tax credit. However, qualified service members who sell or move from a tax-credit home within three years of the initial purchase due to official extended duty are exempt from the recapture rule.

"Qualified service member" means a member of the uniformed services of the U.S military, a member of the foreign service of the U.S., or an employee of the intelligence community.

For years, all military personnel on active duty have been eligible for help with their mortgage and other debt under the Soldiers’ and Sailors’ Civil Relief Act (SSCRA).

The act allows Reserve and National Guard members and other military personnel whose mortgage obligations pre-date the start of their active duty to cap their mortgage rates at 6 percent while they are on active duty. Other benefits of the act include a prohibition on lenders foreclosing against affected military personnel during, and three months after, their tour of active duty.

Since home-loan rates have hovered around 6 percent for several months, one of the most significant provisions of the act includes consumer debt. It limits the amount of interest that may be collected on all debts — not just mortgages — of persons in military service to 6 percent per year during the period of military service.

This provision applies to debts incurred prior to the commencement of active duty and includes interest on credit-card debt, car loans and other debts.

Another key provision under the SSCRA protects dependents from being evicted while service members are serving. If a service member rents a house or apartment that is occupied for dwelling purposes and the rent does not exceed $1,200 per month, the landlord must obtain a court order authorizing eviction.

This provision applies regardless of whether quarters were rented before or after entry into military service.

In cases of eviction from dwelling quarters, courts may grant a stay of up to three months or enter any other "order as may be just" if military service materially affects the service member’s ability to pay the rent.

This provision is not intended to allow military members to avoid paying rent, but rather to protect families when they cannot pay the rent because military service has affected their ability to do so.

Another significant protection under the act relates to civil proceedings. Service members involved in civil litigation can request a delay in proceedings if they can show their military responsibilities preclude their proper representation in court. Service members who are on an extended deployment or stationed overseas most often invoke this provision.

The Office of the Undersecretary of Defense for Personnel and Readiness emphasized that the provision applies to pre-service debts, and the interest-rate reduction doesn’t occur automatically — service members must request it.

Tom Kelly’s book "Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border" was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.


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