American Recovery and Reinvestment Act
with an Enhanced Tax Credit
Provides Outstanding Opportunity for Home Buyers
In its efforts to stimulate the economy and revive the housing market, Congress has enacted legislation providing a tax credit of up to $8,000 for first-time home buyers. Unlike the $7,500 Home Buyer Tax Credit enacted last year, this credit does not have to be repaid.
For this tax credit, time is of the essence for buyers who want to take advantage of this opportunity. Only homes purchased on or after January 1, 2009 and before December 1, 2009 are eligible. While this has been called a "first time" home buyer's tax credit, its important to note that "first time" is defined as the purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase.
Our Sales and Broker Associates at RE/MAX Northern Edge Realty re all well-versed in this tax credit and can assist you in your search to buy a home. Is this a great time to buy - of course!
Here are the changes from the $7500 Tax Credit, to the New $8,000 Tax Credit in the American Recovery and Reinvestment Act, major modifications are italicized.
February 2009 FEATURE CREDIT AS CREATED JULY 2008 APPLIES TO ALL QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008 REVISED CREDIT - EFFECTIVE FOR PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009 Amount of Credit Lesser of 10 percent of cost of home or $7500 Maximum credit amount increased to $8000 Eligible Property Any single family residence (including condos, co-ops, townhouses) that will be used as a principal residence. No change All principal residences eligible. Refundable Yes. Reduces (or can eliminate) income tax liability for the year of purchase. Any unused amount of tax credit refunded to purchaser. No change Purchasers will continue to receive refund for unused amount when tax return is filed. Income Limit Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000). No change Same income limits continue to apply. First-time Homebuyer Only Yes. Purchaser (and purchaser's spouse) may not have owned a principal residence in 3 years previous to purchase. No change Still available for first-time purchasers only. Three-year rule continues to apply. Revenue Bond Financing No credit allowed if home financed with state/local bond funding. Purchasers who utilize revenue bond financing can use credit. Repayment Yes. Portion (6.67% of credit or $500) to be repaid each year for 15 years, starting with 2010 tax filing. No repayment for purchases on or after January 1, 2009 and before December 1, 2009 Recapture If home sold before 15-year repayment period ends, then outstanding balance of repayment amount recaptured on sale. If home is sold within three years of purchase, entire amount of credit is recaptured on sale. Applies only to homes purchased in 2009. Termination July 1, 2009 (But note program changes for 2009) December 1, 2009 Effective Date Purchases on or after April 9, 2008 and before January 1, 2009. Repayment to begin for 2010 tax year. All revisions are effective as of January 1, 2009
