Homebuyer Tax Credit

Congress has extended and expanded the homebuyer tax credit.  Certainly good news for buyers, sellers, lenders and real estate agents since the credit is designed to give the real estate and mortgage industry a much needed shot in the arm.  As with most of what our government does there are always some questions about who is eligible and exactly what one can expect. 

The homebuyer tax credit now runs until April 30, 2010, a six month extension from the original program which is hoped to add another approximately 350,000 purchasers to take advantage of the program.  The program has been extended to include current homeowners which should expand the number of people taking advantage of the program to over 500,000.  There are some key areas and questions that need to be clarified for those thinking now may be the time to make a move as a first time buyer or current homeowner looking to find another home. 

Existing homeowners must have used the home sold or being sold as a principal residence consecutively for five of the previous eight years.  It does not matter if your new house costs more or less as long as you meet the above requirement.  Your credit as a current homeowner will be $6500 or $3250 if married and filing separately.  Income limits have also been increased to include more people eligible from $75,000 for single and $150,000 married to $125,000 single and $225,000 for married.  In the original plan there was no limitation on cost of the purchased home but that has now changed to a $800,000 purchase price which is well above the median price of homes.  The original plan called for the home to close no later than December 1, 2009 but the new plan has been expanded to include any home that has a binding contract to purchase in effect on April 30, 2010.  The purchaser has until July 1, 2010 to close to be eligible to receive the tax credit.

The homebuyer tax credit is an effort to jump start the housing market and hopefully more than the half million expected homebuyers will take advantage of the program.  With the volatile stock market and unemployment rising any advantage is a welcome addition to helping us get back on our feet.  As many economists have said, the strength of the housing market is an indicator of economic activity and the economic strength of this country.