Big Tax Credit for First Time Homebuyers

With the Stimulus package signed into law this week, we have learned more about the tax credit being offered to homebuyers.

The credit extends to first-time homebuyers, which also includes those who have not owned a home for more than three years. According to the National Association of Realtors most recent survey of home buyers and sellers, the tax credit could benefit as many as 40% or more of the home buying population.

The credit will be up to $8,000 or 10% of the home's value, whichever is less. It applies to primary residences purchased from January 1, 2009 and prior to December 1, 2009. The former law limited the tax credit to $7,500 and applied to purchases made prior to June 30, 2009. The tax credit is also set up as a "refundable" credit, which means that even if the tax payer does not owe $8,000 in income taxes he or she will still get the full benefit of the credit. In other words, a taxpayer could get a check back from the government for the amount the credit exceeds taxes due.
Besides these great features, perhaps the biggest distinction with the former tax credit law is that the new law does not require repayment of the tax credit as long as the buyer holds the property for at least three years.

If this tax credit applies to you or someone you know, be sure to contact a tax advisor to learn more about how to take advantage of this opportunity. This fact combined with lower home prices and unusually low interest rates makes the current market a great time to be a buyer.