Recently the President signed new legislation, the Worker, Homeownership, and Business Assistance Act of 2009. This new law extends the home buyer tax credit and expands it to some current homeowners. This law is not only an important step to keep the momentum going towards ensuring a real estate recovery, but also offers another great reason for buyers to purchase and sellers to list a home before Spring 2010!

We believe the substantial rise in home sales over the past few months will continue, and proves the tax credit is working and is being used by buyers who were waiting for the right opportunity to purchase a home. Extending and expanding the home buyer tax credit now enables even more families to take advantage of current low interest rates, large housing inventories, and affordable prices to invest in their future through homeownership.

Generally, this law extends the present $8,000 tax credit for first-time home buyers through April 30, 2010. Also, current homeowners are eligible for a $6,500 tax credit through April 30, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years. If potential home buyers have a binding contract on or before April 30, 2010, they will have until July 1, 2010 to close the transaction.

Each home buyer’s tax credit is determined by two additional factors: price of the home (cannot exceed $800,000); and the buyer’s income. Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples. The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income-over $145,000 for singles and over $245,000 for couples are not eligible for the credit. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

This entry was posted on Tuesday, November 17th, 2009 at 7:29 pm and is filed under Home Buying Resources, Housing Market / Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.