07 November 2009

President Obama approves Extension + Expansion of Homebuyer Credit

On Friday, President Barack Obama signed the bill that includes the extension and expansion of the homebuyer tax credit. The credit will thus not expire on November 30, 2009, but continue in its extended form until 30 April 2010, with the following stipulations:
  • $8,000 tax credit to first time homebuyers (Definition of a first-time homebuyer according to the IRS: you did not own a home in the past 3 years).
  • The tax credit will actually be 10 percent of the home purchase price, up to $8,000.
  • New: tax credit of up to $6,500 for existing homeowners looking to purchase a different primary residence. Conditions: primary residence “swap”, buyers must have owned their home for five consecutive of the previous eight years.
  • New: income limits raised to $125,000 for single filers and $225,000 for joint filers (read: if you don’t file a US tax return, you don’t qualify – my apologies to my Canadian, South-American and European friends)
  • Purchase agreements have to be signed by April 30, 2010 and closed by June 30, 2010.
  • Purchase price of home must not exceed $800,000.
I consider the measure a necessary evil. It will certainly help the housing market, which is far from being healthy yet, especially in those areas that bubbled and burst, like Southern Florida.

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