Goodies in the Stimulus Package for Home Buyers and Home Owners

February 17th, 2009 categories: Real Estate Listings, Real Estate Market

Home buyers and home owners can benefit from some significant tax credits in 2009 courtesy of The American Recovery and Reinvestment Act of 2009.

Home Buyer Tax Credit

A refundable tax credit of up to $8,000 or 10% of home purchase price, whichever is less. Credit can be taken on 2008 or 2009 income tax returns. The tax credit is refundable - the entire amount must be paid back at the time of sale if buyers sell house within three years. In order to qualify:

Buyers must be “first time home buyers” or can not have owned a home within the last three years

Buyers can earn no more $75,000 (single) $150,000 (couple) for full credit - higher incomes eligible for partial credit

Owner occupied properties only

Purchase home between January 1, 2009 and November 30, 2009

Here’s an excerpt from the Senate Finance and House Ways & Means Committees’ Summary of The American Recovery and Reinvestment Act of 2009:

Refundable First-time Home Buyer Credit. Last year, Congress provided taxpayers with a refundable tax credit that was equivalent to an interest-free loan equal to 10 percent of the purchase of a home (up to $7,500) by first-time home buyers. The provision applies to homes purchased on or after April 9, 2008 and before July 1, 2009. Taxpayers receiving this tax credit are currently required to repay any amount received under this provision back to the government over 15 years in equal installments, or, if earlier, when the home is sold. The credit phases out for taxpayers with adjusted gross income in excess of $75,000 ($150,000 in the case of a joint return). The bill eliminates the repayment obligation for taxpayers that purchase homes after January 1, 2009, increases the maximum value of the credit to $8,000, and removes the prohibition on financing by mortgage revenue bonds, and extends the availability of the credit for homes purchased before December 1, 2009. The provision would retain the credit recapture if the house is sold within three years of purchase.

Energy Efficient Improvements to Existing Homes

In addition to the home buyer tax credit, the federal tax credits for energy efficient improvements have been increased from 10% of cost to 30% of cost through 2010, with a total cap of $1,500 per homeowner for all properties qualifying for credit (cap was $500). If you’ve been thinking about installing new windows or doors, adding insulation, replacing a heating system or water heater, among other things, now might be a really good time.

Visit the Energy Star site for a list of qualifying improvements, but please note that as of today, they have not updated the tax credit information.

Click here to read the entire summary. Thanks to my client for making my life easier by sending this to me.