For the past couple of months, there has been speculation on whether Congress would extend the First-Time Homebuyer Tax Credit which was due to expire on November 30th (see our blog from October 5th).
In a 403-12 vote, the House approved the Worker, Homeownership and Business Assistance Act of 2009 – a $24 billion economic stimulus bill which extends unemployment benefits to the longtime jobless and extends and expands the homebuyer tax credit. The Senate passed the legislation 98-0 and President Obama signed the bill into law on Friday, November 6th.
Since January, first-time homebuyers have been getting tax credits of up to $8,000 (10 percent on principal homes valued up to $800,000). This includes buyers who haven’t owned a home in three years. Not only does the credit amount remain the same for these first-time homebuyers, the program now includes a $6,500 credit for existing homeowners who buy a new home after living in their residence for at least five years.
The November 30, 2009 deadline has also been extended and both groups now have until April 30, 2010 to sign a purchase agreement and until June 30, 2010 to close.
According to the National Association of Realtors, about 1.8 million first-time homebuyers will have qualified for the credit by the end of November. Of that number, they estimate that at least 350,000 of them would not have purchased their homes without the credit.
The expansion of this credit also allows for more generous income limits. Phase out begins for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000. That’s up from $75,000 for individuals and $150,000 for joint filers.
Two other points are addressed in the Worker, Homeownership and Business Assistance Act of 2009 – unemploment benefits are extended by another 14-20 weeks and all money-losing companies can now use current losses to offset taxable profits in the previous five years (giving them refunds of taxes paid in those years).
For full details on this legislation and for access to the applicable IRS forms, click onto www.irs.gov.