As part of the American Recovery and Reinvestment Act, Congress is now giving a substantial gift to first-time home buyers! If you purchase a home between now and December 1st, 2009 you will receive a tax credit against your income tax due in the amount of 10% of the purchase price of the home. The maximum credit available is $8,000. The biggest change from the previous $7500 tax credit is that the new credit DOES NOT have to be repaid to Uncle Sam! The income limits are $75,000 adjusted gross income for individuals and $150,000 for those filing jointly. The credit is reduced above these limits until they are eliminated for those filing as an individuals whose adjusted gross income is $95,000 or over and $170,000 for those filing jointly. You also need to keep the home three years or you will be subject to recapture on the tax credit.
One of my clients just bought a home and will have a $8000 reduction of his 2009 income taxes. He may even be due a refund! What a help in buying new carpets, decorating, or paying off Mom and Dad for helping with closing costs or the down payment!! This is a boon to buyers and seller alike and I think it will go a long in helping to reduce housing inventory, and therefore reducing the downward pressure on home prices
Call me if you have any questions about this change in the law. REMEMBER, it is only available until December 1, 2009.
