American Recovery and Reinvestment Act of 2009

Would-be home buyers who have been holding off buying a home have little reason to continue to wait—assuming that they feel reasonably secure in their jobs. The American Recovery and Reinvestment Act of 2009 now offers first-time home buyers—defined as anyone who has not owned or held an interest in real estate over the past three years—an $8,000 tax credit. This time, it is an actual tax credit, and not just an interest-free loan. The following bulleted list reviews the features of the tax credit.

First-Time Homebuyer Tax Credit

• Effective Dates--Available on homes bought between January 1, 2009 and December 31, 2009.
  
  
• Eligible Persons--First-time home buyers (must not own or have owned an interest in a home in the past three years.


• Refundable--The unused amount of the tax credit above the amount due to be refunded payable to the beneficiary.
  
  
• Amount of Credit--10% of purchase price up to a maximum of $8,000.


• Eligible Property--Any principal residence.


• Income Limit
• Single--Adjusted gross income of $75,000


• Married, filing a joint return--Adjusted gross income of $150,000


• Phases out above $95,000 and $170,000, respectively


• Revenue Bond Financing--Credit available to buyers who use state/local bond funding


• Recapture--If home is sold within three years, the entire amount of the tax credit must be repaid on sale.
  
  
• No Repayment

When considering the other benefits of home ownership, and the significant discounts and buyer incentives many sellers will concede in the negotiations, this truly is a good time to buy a home.

The act also offers new incentives to lenders to refinance homes that are in jeopardy of foreclosure. While this feature of the act offers little hope to home owners who bought significantly over-priced homes in speculative markets. The majority of home owners who are having difficulty meeting their mortgage payment can benefit from this feature of the act. Just as before the incentive to restructure the mortgage debt was offered, it is up to the home owner to contact their lender to determine just what the lender will do for them.

To find out how to claim your due as a first-time home owner, read the IRS guidelines for claiming your $8,000 tax credit.