$8,000 Home Buyer Tax Credit Details

The recently approved American Recovery and Reinvestment Act of 2009, combined with the most favorable resale prices in years, offers a once-in-a-lifetime opportunity for the purchase of a home.

The measure has a multitude of features designed to stimulate the economy and spur home sales, which trigger a ripple effect throughout many industries. The Acts features include:

• An $8,000 tax credit - up from $7,500 - that would be available to first-time home buyers for the purchase of a principal residence on or after January 1 and before December 1.
• The credit applies only to homes purchased during 2009.
• The credit does not require repayment. However, if the home is sold within three years, the entire credit is recaptured upon sale.
• The credit will be claimed on a tax return to reduce the purchaser's income tax liability. If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.
• Purchaser and purchaser's spouse may not have owned a principal residence within the three years prior to purchase.
• The full amount of the credit is available to individuals with a gross adjusted income of no more than $75,000 or $150,000 if a joint return is filed. The credit phases out above those caps ($95,000 and $170,000).
• Eligible properties include any single-family residence - including condominiums, co-ops or townhouses - that will be used as a principal residence.
• While most of the provisions are similar to the measure approved in 2008, there are some differences, such as: purchasers who utilize revenue bond financing now can use the credit.
• A provision of the bill also provides $2 billion in additional funding for the Neighborhood Stabilization Program. The NSP was created by the Housing and Economic Recovery Act of 2008 to offer grants through the Community Development Block Grant program to states and localities to address the problems that can be created when whole neighborhoods are decimated by foreclosures. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties.

In addition, the funds can also be used by states and localities to establish financing methods for the purchase and redevelopment of foreclosed properties.

After purchase the homes must be used to assist individuals and families with incomes at or below 120 percent of area median income.

Twenty-five percent of funds must be used for households with incomes at or below 50 percent of area median income.

By leveraging their expertise in partnership with others from both the public and private sector, Realtors in many communities have been making important contributions to their local communities' neighborhood stabilization programs.

For additional details on the Recovery Act, contact your Realtor or go on-line to www.housingmarketfacts.com.