Expanded Homebuyer Tax Credit Legislation

Tax credit extended for first-time homebuyers and expanded to include qualified current homeowners

November 11, 2009- Thanks to legislation recently passed by the United States Congress and signed into law by President Barack Obama on Nov. 6, qualified first-time homebuyers and current homeowners have what is likely to be their best and final opportunity to receive substantial assistance with the purchase of a home

The American Recovery and Reinvestment Act of 2009, offering an $8,000 credit for qualified first-time homebuyers and which was set to expire at the end of November, has now been both extended and expanded in scope.

The Homebuyer Tax Credit will now be available for first-time homebuyers who sign a binding contract by April 30, 2010 and close on the purchase by June 30, 2010. In addition, the scope of act has been expanded to include a $6,500 credit for current homeowners who purchase a new primary residence. Under the terms of the legislation, current homeowners must have used the home they have sold, or that is being sold, as their primary residence consecutively for five of the past eight years.

Other eligibility requirements apply, including income limits, but individuals who exceed the limit may be eligible for a partial credit, and buyers should seek advice from a professional tax advisor for specific tax calculations. For a summary (in PDF format) of eligibility requirements for both first-time homebuyers and current homeowners, visit http://www.era.com/eraresources/buyingadvice/taxcredit.jsp.

This legislation will help stimulate a significant level of home buying activity in the market and, more importantly, it will have a terrific impact on our economy. Given that many leading economists believe the U.S. economy is in the early stages of a recovery, I don’t foresee the tax credits being extended beyond the April expiration date. I caution all potential buyers that this is likely to be their last opportunity to take advantage of this generous tax credit.

To find out more about the American Recovery and Reinvestment Act temporary federal income tax credit and whether it may be available to you, contact your tax professional or legal adviser; and contact me at kenneth.brown@erakirsch.com or 781-250-0126 to help you find your new home.

According to the National Association of Realtors (NAR), about 1.4 million first-time homebuyers have qualified for the tax credit through August; NAR estimates that 350,000 of these buyers would not have purchased their homes without the credit.