This afternoon President Obama signed the new 2009 Stimulus Bill which contained provisions to make some changes to the currently home buyer tax credit. This is really great news to individuals in a position to purchase a home.
Just to recap, the previous bill allowed individuals or couples who purchase their first home in three years to receive a “tax credit” of up to 10% of the new property’s purchase price up to a maximum amount of $7,500 provided that the purchaser’s income was $75,000 or under for an individual or $150,000 for a couple. In order to take advantage of the tax credit, the purchaser had to live in the property as their primary residence. Unfortunately, this was not a true tax credit but more of an interest free loan, as it had to be paid back in equal increments over a fifteen year period. If the purchaser sold the house before the loan was repaid, the remaining balance had to be paid out of the home’s proceeds from sale. If the seller did not turn a profit at closing, the loan would be forgiven.
Under the new bill, the maximum amount of the credit is raised to $8,000. All of the previous requirements remain unchanged however this is truly a tax credit, as it does not have to be repaid provided that the purchaser remains in the home for at least three years.
This version of the bill will apply to anyone who purchased a home starting January 1, 2009 and extends until closings on December 1st, 2009. Home buyers who qualify can file paperwork to take advantage of the tax credit on their 2008 taxes.
Interest rates are at all time lows, there’s an abundance of inventory available and now with the available tax credit, borrowers who qualify to purchase a home would be literally leaving money on the table by waiting to purchase.