**Update November 6, 2009: President Obama has just signed a new law extending this tax credit until April 2010. Under the new law, most of the requirements remain the same, but the income cap has been raised to $125,000 or $225,000 for couples and the home must be priced under $800,000 to qualify. An additional $6,500 tax credit was also added for existing home owners, providing they have owned the home for at least five years. **
Today, there are many incentives for new home buyers. It is possible to get some great deals on homes, as home values are at a historic low. There are many foreclosures as well, which can be a great way to save money, and mortgage interest rates are also the lowest they have been for many years. There is also an $8,000 first time home buyer tax credit available to Americans, which does not have to be repaid.
The First Time Home Buyers Tax Credit is part of Obama’s American Recovery and Reinvestment Act, which was passed in 2009. This tax incentive is designed to help jump start the economy and help make homes more affordable for first time home owners. This is not the first time a tax incentive has been offered to new home owners, however the Obama housing tax credit is different because it will not need to be repaid.
*Under the extension, as long as you have a binding sales contract in place before April 30, 2010, you have until June 30, 2010 to actually close on the home.
The Obama First Time Buyers Tax Incentive can be applied towards many types of homes, including mobile homes, manufactured homes, single family homes, condominiums, house boats, multi-family homes, and even new constructions.
The Federal housing tax credit for first time home buyers provides for 10% of the value of the home, up to $8,000.
The $8,000 stimulus check does not need to repaid, providing you live in the home for at least three years. If the home is sold or is no longer used as your primary residence in the first three years, the $8,000 will need to be repaid.
The 2009 First Time Home Buyers Tax Credit can be claimed on either your 2008 or 2009 tax return. It is necessary to complete an IRS Form 5405 and submit it with your regular tax return.
If you have already submitted your 2008 tax return to the IRS, it is possible to file an amended tax return, to receive your money early. An amended tax return usually takes between 6 to 8 weeks for the IRS to process and will mean you can receive your stimulus check early, without having to wait.
If you owe the IRS money, then the stimulus check will be used towards this balance, with the remaining funds returned to the first time home owner.
Those that do not owe the IRS any money will receive the full balance of the stimulus check. This is true even of those who do not pay any income tax.
You would not qualify for Obama’s First Time Home Buyers Tax Credit, but there is a different tax credit available.
For those who purchase a home between April 8, 2008, and Dec. 1, 2009, an $8,000 no interest loan is available. This loan is provided as part of the Housing and Economic Recovery Act of 2008 and will need to be repaid starting in 2010.
The First Time Homebuyers Credit has most of the same requirements as Obama’s Tax Incentive.