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As you probably know the original $8,000 Home Buyer tax credit only applied to first time home buyers and capped the income of those eligible to purchase a new home using the $8,000 credit.

The House (H.R. 1245) and Senate (S.1230) have presented the following (CBS NEWS):

Increase the first-time home buyer tax credit from $8,000 to $15,000;

Expand the tax credit’s eligibility to apply to any buyer;

Eliminate the $75,000/$150,000 income cap;

Extend the tax credit for one year from the date of enactment.

This would be an awesome deal if they expanded the credit in this manner.  I feel the $8,000 credit is short sighted in that the real estate market could stand to benefit from the surge in ANYONE buying a house, new and seasoned home buyers.  I’m no economist, but seeing all the short sales and foreclosures in my area I am salivating at the thought of picking up a few condos in neighbouring states and the tax credit would certainly help.  I’m sure other local real estate investors feel the same way, especially since it would take more than a few nuisance properties off the market with new owners intent on getting them occupied with renters or as a primary residence.  I see this as win win.

Now, as for the current $8,000 credit, here are some things you need to know per US NEWS:

1. Eight grand, new buyers: The tax credit included in the economic stimulus legislation is much narrower than the $15,000 proposal. This credit is equivalent to 10 percent of the purchase price of the home–although it’s capped at $8,000–and applies only to first-time home buyers and principal residences. But unlike an earlier $7,500 home buyer tax credit, this one does not have to be repaid.

2. First time buyers defined: For the purpose of this legislation, a “first-time home buyer” is someone who hasn’t owned a principal residence for three years before buying a house. (The date of purchase is considered the day that the title is transferred.) That means if you’ve owned a vacation home–but not a principal residence–within the past three years, you would still qualify for the credit.

3. 2009 buyers only: Only those who purchase a home on or after January 1 and before December 1, 2009 are eligible for the credit. Anyone who bought a home last year won’t be able to take advantage of it.

4. Income limits: The tax credit is subject to income limitations. Single buyers need a modified adjusted gross income of $75,000 or less to qualify for the full credit, that’s $150,000 for married couples. Those earning more than these thresholds may be eligible for reduced credits.

5. Refundable: Because the tax credit is “refundable,” qualified buyers can take advantage of it even if they don’t have much tax liability.

6. Recapture: Buyers have to own the home for at least three years in order to capitalize on the credit. If they sell the home before then, they will have to return the credit to the government. (Exceptions will be made in certain cases, such as death or divorce.)

What are your thoughts? If you are a new or seasoned homeowner would yo take advantage of the credit?

Categorized as Personal Finance