Calling all first-time buyers… take advantage of the new tax credit while supplies last!!!

Part of the economic stimulus package recently passed by Congress and signed into law by President Obama includes a first-time home buyer tax credit.  The full credit is available to any first-time buyer (or a buyer who hasn’t owned a home in the last three years) whose adjusted gross income is no more than $75,000 for a single-filer or $150,000 for joint filers.  The credit decreases incrementally for single-filers making between $75,000 - $95,000 or joint filers making between $150,00 - $170,000 and is unavailable for those making more than these amounts.  The qualifying dates of purchase are from January 1, 2009 through December 1, 2009 (the sale cannot ‘close’ past December 1).  It is worth noting that the ‘first-time buyer’ definition must apply to both parties for married joint filers in order to take advantage of the credit on a joint return.

The credit is calculated as 10% of the purchase price, up to $8000.  There is no repayment requirement (unlike the 2008 tax credit program) unless the property is sold within three years of purchase.  The property must be used as the buyer’s primary residence (typically defined as where they spend more than 50% of their time) and must be within the United States.

Buyers claim the credit on their income tax return to reduce their overall tax liability.  If the credit is more than their total tax liability for that year, then the buyer will receive a check for the balance.  Since this is a credit ‘after the fact’ it can not be used for down payment.

Other conditions may apply; additional information on the first-time buyer tax credit can be found on the Illinois Association of Realtors website.

Inventory is up, prices and mortgage rates are down, and now a homebuyer tax credit… it is absolutely the best time in YEARS to buy real estate, especially for the first-timer!