$8,000 First Time Home Buyer Tax Credit

With the signing of the American Recovery and Reinvestment Act 2009 by President Obama on Tuesday in Denver the prospect for first time home buyers to cash in continued.  The new act continues a tax credit for first time home buyers, that is people who haven't owned a home in the past three years, and in fact increased it.  Below is a description posted by the National Association of Realtors.

The bill provides for a $8,000 tax credit that would be available to first-time home buyers for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.  The credit does not require repayment.  Most of the mechanics of the credit will be the same as under the 2008 rules:  the credit will be claimed on a tax return to reduce the purchaser's income tax liability.  If any credit amount remains unused, then the unused amount will be refunded as a check to the purchaser.

The change that stands out the most is the credit does not require repayment.  The previous bill required the purchaser to repay the money over a period of time out of future tax returns.  From what I understand, the amount is equal to 10% of the purchase price with a maximum of $8,000.  So, if someone were to purchase a home for $80,000 or more they would get a $8,000 tax credit!  In my opinion, THAT'S AWESOME!

With interest rates being as low as they are, combined with this, anyone who has been sitting on the fence about buying that first home should act NOW!