New Bill Signed Into Law Extends and Revises Homebuyer Tax Credit
On November 6, 2009, President Obama signed a bill into law that extends the $8,000first-time homebuyers tax credit program, initially scheduled to end in November, toApril 2010. The expanded tax credit is part of a legislation that extends unemployment benefits by at least 14 weeks in 50 states.Besides extending the tax credit for first-time homebuyers, the program also makes a taxcredit of up to $6,500 available to existing homeowners who are looking for a ‘step-up’ by selling their current home and buying another one during the same period.While the first-time homebuyer tax credit has already helped many potential homebuyerstransition into their first homes, expanding the credit to existing homeowners may help push more qualified buyers to purchase homes. Experts are debating over whether thisextension will help revive the housing market and increase home sales or if it would onlycreate another bubble in the market.Below are the highlights of the new tax credit law:
For First-Time Homebuyers
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First-time home buyers can claim the $8,000 tax credit by signing a sales contract before May 1, 2010 and close on the sale before June 30, 2010.
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Those who serve in the military and who are on extended duty outside the UnitedStates can claim the credit till July 1, 2011, provided they sign the sales contract before May 1, 2011.
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The maximum income limit for receiving the tax credit has now been raised from$75,000 for single buyers to $125,000. The income limit for married couples hasalso been raised from $150,000 to $225,000. A partial tax credit is available for single buyers making between $125,000 and $145,000 and for married couplesmaking between $225,000 and $245,000.
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The tax credit does not have to be repaid unless you sell your home within threeyears.
For Existing or Repeat Homebuyers
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Homebuyers who have lived in their current home for at least five years and wishto buy a new home are eligible for a tax credit of up to $6,500.
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