To help the housing recovery along and aid in stimulating the economy, President Obama signed an expanded and extended homebuyer's tax credit last Friday.

The $8000 first-time home-buyer's credit was set to expire on November 30, 2009 under the original plan. The extended program keeps the first-time buyer program in effect until April 30, 2010. To qualify as a first-time buyer, the purchaser or their spouse cannot have owned a home in the past three years.

But what's even better is that the Extended Home Buyer Tax Credit also makes up to a $6500 credit available to current home owners who purchase a new or existing home between November 7, 2009 and April 30, 2010. To qualify for the credit, the buyer must have resided in the home that's being sold or vacated for five consecutive years within the last eight.

And as long as a written binding contract to purchase is signed by the April 30, 2010 deadline, the home buyer has until July 1, 2010 to close on their home.

The home-buyer credit may be applied to a property being used as a primary residence, including single family homes, townhomes, condos, and co-ops. The credit will not have to be repaid as long as the purchaser remains in the home as their principal residence for three years. But if the home buyer sells their home during that three year period, the entire credit will have to be paid back at the sale of the home.

The amount of the credit will be determined by the price of the home and the buyer's income. The price of the home purchased cannot exceed $800,000.

Single buyers with incomes up to $125,000, and married couples with combined incomes of up to $225,000 may take the maximum allowable credit. The amount of the credit phases out for single buyers with incomes between $125,000 and $145,000, and for couples with incomes between $225,000 and $245,000. Singles with incomes above $145,000 and couples with incomes above $245,000 are not eligible to take the credit.

National Association of Realtors (NAR) President Charles McMillan encourage Congress to extend the tax credit. "The substantial rise in home sales we’ve seen over the past few months proves that the tax credit is working and is being used by buyers who were waiting for the right opportunity to get into the market," he said. "This important incentive is helping to stabilize the housing market, stimulate the economy and create new jobs in communities all across our great nation. Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership."

Chairman of the Mortgage Bankers Association (MBA) Robert E. Story, Jr. said in a statement, "At a time when we are finally starting to see some signs of life in the housing and mortgage markets, extending and expanding the homebuyer tax credit is a critical step to keeping the momentum. This has been one of MBA’s top single family legislative priorities, and we are very glad to see that policymakers on both sides of the aisle see the importance of this measure.

"The existing credit for first-time homebuyers has helped move a segment of potential homebuyers off the sidelines and into their first homes. By expanding it to qualified existing homeowners, we can help stimulate even more home purchases for qualified buyers. I also want to applaud measures in the bill that will help eliminate fraudulent use of the tax credit."



Sources:
National Association of Realtors
Mortgage Bankers Association