President Obama signed legislation to extend and expand the $8,000 first-time homebuyer tax credit that had been set to expire at the end of the month. These tax credit changes are included in the Worker, Homeownership and Business Assistance Act of 2009, which also extends unemployment benefits to people who have been jobless for more than one year.
The new legislation extends the deadline for the first-time homebuyer tax credit to include home purchase contracts entered into by April 30, 2010 and closed by June 30, 2010. The tax credit was also expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence — if they have lived in their current residence for at least five consecutive years of the past eight years.
Homebuyers looking to take advantage of either tax credit are subject to income eligibility limits of $125,000 for individuals and $225,000 for married couples, up from the limits of $75,000 and $150,000 included in the previous law. The home purchased must cost less than $800,000 to qualify the homebuyer for the tax credit. And to help guard against fraud, buyers are required to attach documentation of the home purchase to their tax return.
After signing the bill into law this morning, President Obama said “the rebound in the housing market was one of the big factors that contributed to the growth of the economy last quarter, and brought hundreds of thousands of families into the housing market. We want to give even more families the chance to own their own home.”
NAR economists estimate that the current tax credit has contributed approximately $22 billion to the general economy, and that approximately 2 million people will take advantage of the tax credit this year.
“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,” says NAR President Charles McMillan. “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.”
Tax Credit Resources from NAR:
Details on Homebuyer Tax Credit Changes
Frequently Asked Questions on the Expanded Homebuyer Tax Credit
Fri, Nov 6, 2009
