President Obama & Congress Extend & Expand First Time Home Buyer’s Tax

President Obama signed into law today the extension and expansion of the 1st Time Home Buyer Tax Credit after congress voted overwhelming to approve it yesterday, Thursday November 5th, including a Senate vote of 98-0. It is known as the Worker, Homeownership and Business Assistance Act of 2009.

To help inform those of you potentially eligible for this generous tax credit that is essentially a gift from Uncle Sam as it requires not repayment, here are some associated parameters.

Expiration date for the credit moves from needing to close by November 30th to needing to get under contract by April 30th, 2010 and close by July 1st, 2010. It is an $8,000 maximum credit for individual tax payers & married couples, up to $4,000 for married couples filing separately.

A new feature of the tax credit is that home buyers residing in the current residence for any five consecutive 5 year period during the 8-year period ending on the date of the purchase of a subsequent principal residence are now also eligible, but for a slightly smaller credit: married couples for $6,500, $3,200 for tax payers filing separately.

The income limits for both tax credits have been raised to $125,000 (increased from the former $75,000) for individual filers & $225,000 (formerly $150,000) for married joint filers. The credits are, amazingly, fully refundable: they will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

The definition of a first time home buyer is not having had an interest in a principal residence for three years prior to purchase. Vacation homes are ineligible.

Added restrictions include the tax credit may not be used to buy a home for more than $800,000, dependents (children under 18) are no longer eligible as purchasers and as an anti-fraud measure, all buyers seeking the credit must include purchase documentation on their tax returns.

Properties that close after today, the day of enactment, are eligible. For a more detailed run down of this legislation, here’s a link to the Internal Revenue Service site on it.

Rep. Jim McDermott, D-Washington:

“The home buyers’ credit has helped pave the way for stabilization in the housing market and contributed to three consecutive months of rising home prices. Its extension will continue to make home ownership more affordable and bring confidence to a housing market and economy that remain fragile.”

Charles McMillan, president of the National Association of Realtors:

“The substantial rise in home sales we’ve seen over the past few months proves that the tax credit is working and is being used by buyers who were waiting for the right opportunity to get into the market. This important incentive is helping to stabilize the housing market, stimulate the economy and create new jobs in communities all across our great nation. Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership.”

The Wall Street Journal reported Sen. Johnny Isakson, the Georgia Republican who has been a staunch advocate of the credit, promised that this would be the “last extension” of the credit, according to Dow Jones Newswires’ Corey Boles. “Tax credits like this only work by creating the sense of urgency to take advantage of it,” Sen. Isakson said. Click here for the full text of the WSJ article on the tax credit extension.

If you have further questions on the tax credit extension and expansion, would like to shop for a property to purchase and take advantage of the credit, or would like to look into listing your own property for eligible prospective purchasers, please contact Maple Sweet Real Estate at maplesweet.com call 800.525.7965 or e-mail info(at)maplesweet(dotted)com