The stimulus bill that President Obama signed into law has a tax credit for new home buyers. The new credit is $8000 or 10% of the purchase price of a new home, whichever is lower, and a home buyer is eligible for the full credit only if they have an income of $75,000 a year individually or $150,000 dollars a year filing jointly and the home is bought between January 1, 2009 and December 1, 2009.
This is a slight increase ($500) over 2008 but the big difference is that the new credit is just that, a true credit and does not need to be paid back. The 2008 “credit” was in, effect, a loan that is required to be paid back over 15 years in 15 equal payments starting in 2010. In my case, if I were to make use of that credit, I would likely opt to have it taken out of my income tax return which would then be $500 dollars less each year unless I were to have a year in which I had no refund coming in which case I would then owe $500 dollars for that years payment.
In order to qualify as a first time home buyer, you must not have owned a home for 3 years prior to purchase and you must stay in the home as your primary residence for 3 years after the purchase or you will be required to pay back the credit in some form although that does not yet seem to have the details worked out.
For those that qualify, you are eligible to take the 2009 credit on your 2008 taxes although the tax forms only allow $7500 dollars so in order to take the full $8000 at once you would need to wait for next year. I am certainly not going to speak for the IRS but one would assume that they will make next years forms such that you can take the $500 that is left over if you claim the 2009 credit in 2008.
This can actually be a true stimulus of sorts because the incentive is to buy a home now and the more folks that can take advantage of this, the more quickly home prices will stabilize and in some cases start to climb. This is certainly a market that is priced for buyers at the moment and with the addition of the tax credit we might actually see the housing market level out and start to climb again which is an additional incentive for those buying homes this year.
The tax credit is there for your use and if you are in the market to buy a home now is a pretty good time to do so.