Last week, President Obama signed The American Recovery and Investment Act of 2009, a $789 billion dollar stimulus bill. What kind of impact does it have on the first time home buyer?
What does the new economic stimulus bill mean to home buyers?
First time home buyers, defined as anyone who hasn’t owned a home in the last three years, can claim a credit of up to $8,000 or 10% of the home’s value, whichever is less, if they purchase a home between January 1, 2009 and December 1, 2009.
How does the $8,000 credit differ from the $7,500 tax credit?
The $7,500 Tax Credit from the previous stimulus bill was really a tax free zero percent loan to first time home buyers. The $8,000 is a true tax credit and doesn’t have to be repaid as long as buyers stay in the home for at least 3 years.
How can you apply?
Qualified buyers can apply for the credit on their 2009 tax returns. Confusion remains whether the new $8,000 tax credit can be included on your 2008 tax returns and a final IRS ruling is needed to confirm. If the IRS says they will accept it on the 2008 returns, taxpayers who have already completed and filed their 2008 taxes with $7,500 credit will be able to file an amended return for 2008 to claim their credit. Stay tuned to find out what the IRS says.
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Chris Williamson is a Mortgage Advisor with Mortgage California specializing in San Mateo Mortgage.
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