On November 6, 2009, President Obama signed into law an extension and expansion of the First Time HomeBuyer Tax Credit which has been in effect since January 1, 2009. Briefly, the law extends the $8000 tax credit which was due to expire on November 30, 2009. The new law extends the credit into 2010. The rules state that the home purchase agreement must be written and signed by April 30, 2010 and closed by June 30, 2010. The former requirement that the buyers not have owned a home in the past three years is still in effect. The credit is limited to 10% of the purchase price of the home or $8000, whichever is less. Income requirements have been increased. The law is effective immediately.
The law is also expanded to include homeowners who have owned their home at least five years of the last eight years. If these homeowners sell their current home and buy a new home before April 30, 2010 and close both transactions by June 30, 2010, they can take a tax credit of $6500. This law goes into effect immediately and will affect any closings occurring between November 6, 2009 and the end of the program on June 30 of 2010.
Both first-timers and repeat buyers will have a price ceiling for the new home of $800,000. The real estate lobby worked hard and long to encourage lawmakers to sign this program extension. There was concern that if the program ended in November, 2009, the housing market would take a nose dive. Timing the program ending for next April is better because the real estate market is typically the strongest over the spring and summer months.
If you have questions, come to our homebuyers class where we have the answers as well as special handouts covering program rules and your questions.