We're still trying to find all of the goodies in the $787 billion dollar stimulus bill that President Obama signed on Tuesday, but the details of the New Home Buyer Tax Credit appear to be the shot in the arm this real estate market needs.
The new law refers to the tax credit as a first-time home buyer tax credit but the law defines first-time home buyer as someone who has not owned a primary residence for three years prior to the date of purchase of the new home. That's not what most people thought first-time home buyer meant, but this new definition opens up the tax credit to many more buyers.
So here is what you need to know in a nutshell:
1. The home must be purchased in 2009.
2. The home must be your primary residence.
3. The person buying the home must not have owned another primary residence for at least 3 years prior.
4. The $8,000 is deducted from the money you owe the federal government when you file your personal tax return in April of 2010. (Your tax bill will be reduced or you will get a refund or both even if your total tax liability doesn't equal $8,000)
5. Here's the catch: You must live in the home as your primary residence for at least 3 years or you'll have to pay the credit back to the federal government (exceptions may be made for death or divorce).
US News and World Report just did a piece on the new law at: