Yesterday President Obama Signed H.R. 3548 which both extended and revised the current tax credit available to first time home buyers who purchase a home. The tax credit has been extended. People purchasing a home must have a home under contract by April 30th 2010, and for those purchases that have been put under contract by April 30th 2010, they must close by June 30th 2010. The tax credit was also revised to include "step up" buyers. Also, the income limits for which people can qualify for the tax credit have increased.
For first time homebuyers, the tax credit is essentially the same. The only difference for first time home buyers is that after November 30th, the income limitations for which they can receive the tax credit have moved up from $75,000 to $150,000 for single taxpayers and from $150,000 to $225,000 for tax payers who are married and file joint returns. The tax credit phases out incrementally for every $20,000 increase in income above the $150,000 and $225,000 income limits.
The new bill signed into law yesterday by Obama also now includes a $6,500 tax credit that is available to "step up" buyers. These are buyers who sell their home to purchase a larger or more expensive home. In order for these step up buyers to qualify for the $6,500 tax credit, they have to have lived in their current princapal residence consecutively for any 5 years out of the last 8 year period. The deadlines and income restrictions are the same for $6,500 step up buyer tax credit as they are for the $8,000 first time homebuyer's tax credit.
The extension and revision of the tax credit available to first time homebuyers and step up buyers is a great opportunity for those thinking about purchasing a home in the near future. With the tax credit, very low interest rates, low home prices and a wide selection of homes to choose from, right now is indeed a great time to buy a home. When a country falls into a recession, money does not disappear, it simply changes hands. In this recessionary period is it possible that a large amount of wealth is shifting to people who are purchasing homes right now at very low prices? Just a thought to ponder. Have a great week!