More Good News For First-Timers

As you may have heard, substantial improvements in the temporary First-Time Homebuyer Tax Credit were signed into law on February 17.  This is to provide a housing stimulus for first-time home purchases that occur between January 1, 2009 and December 1, 2009.  This is more good news for first-time homebuyers because the tax credit maximum has been increased from $7500 to $8000 and best of all it does not need to be repaid unless you resell your home within 3 years.

Here are the significant points:

• Credit maximum was increased from $7500 to $8000.  The credit is calculated as 10% of the purchase price.  For example:  If the puchase price is $80,000 the credit is $8000.
• There is no longer a repayment requirement, provided the homebuyer does not resell the home for 3 years.
• Only first-time homebuyers are eligible.  In this case, a first-time homebuyer is defined as someone who has not owned a primary home at any time during the three years prior to purchase, but who may have done so prior to that time.  Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single.
• To be eligible for the full tax credit, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return).  A homebuyer with an annual adjusted gross income above that level and up to $95,000 ($170,000 on a joint return) is eligible for a reduced tax credit.
• The tax credit can be claimed on one's individual or joint tax return for the purchase of any single family home between January 1, 2009 and December 1, 2009.  It can be claimed on a 2008 tax return (to be filed by April 15, 2009), an amended 2008 tax return, or a 2009 tax return.  You should always consult a professional tax advisor for exact tax calculations and timing.

So, first-timers what are you waiting for?  Prices are right.  Tax credits are in your favor.  Get out there and buy!