The Economic Stimulus Plan of 2009 that President Obama just signed into law in February of 2009 further extends the $7,500 New Home Buyer Tax Credit that was authorized under the Bush Administration and the Housing and Economic Recovery Act of 2008. The $7,500 is now extended to $8,000 and is now a true first time home buyer tax credit where before it was not really a credit but rather loan that had to be paid back. This is the Yah Hoo part!
Builders who lobbied for the plan wanted $15,000 in tax credits to help them sell more of their homes. Aren't the builders and the extreme buildout that they did in 2003-2007 a major reason for the housing foreclosure problem in the U.S.? This is the Boo Hoo part, but keep reading if you are a first time home buyer.
New First Time Home Buyer Tax Credit
The most recent first time home buyers tax credit issued by the Bush Administration in mid 2008 has been extended from $7,500 to $8,000. The other key feature of this credit is that it is now a true tax credit with a real benefit to any first time home buyer who qualifies for the program in 2009.
The 2008 home buying tax credit required the home buyer to pay the credit back over an extended period of time whereas this new 2009 first time home buyer tax credit does not have to be paid back.
Home Buying Tax Credit Given At Tax Time Not At Point Of Sale
One thing that does remain the same is that the credit is given at tax time not at the time when the home buyer buys their new house. This has its pros and cons. Most important of the cons is that the first time home buyer must still come up with the money for down payment and closing costs to buy their house. The best pro is that the tax credit is given to the home buyer no matter whether the first time home buyer taxpayer owes money on their taxes or not.
Who Qualifies For The $8,000 Home Buying Tax Credit?
First and foremost, the 8,000 housing tax credit is for first time home buyers. A first time home buyer is a home buyer who has not had an ownership interest in a house in the immediate past three years. You must purchase the home between January 1, 2009 to November 30, 2009. To get the maximum benefit, a single buyer must earn less than $75,000 and a married couple at $150,000. If the home that is purchased is less than $80,000 then the tax credit is 10% of the home's purchase price.
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