Federal Stimulas Includes Homebuyer Tax Credit

Housing could get a big boost from the latest addition to the stimulus bill working its way through Congress. The latest proposal provides an initiative for first time homebuyers; a $8,000 tax credit.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as “first time” buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit. To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.) And applying for the credit will be easy – homeowners just claim it on their return.

Current law provides for a $7,500 tax break that is more of a loan. This latest provision is truly a tax credit which eliminates the repayment feature.

According to estimates by Lawrence Yun, chief economist for the National Association of Realtors, the $8,000 credit will bring an additional 300,000 new homebuyers into the market