As part of the Economic Recovery Plan, Congress included a generous tax credit to assist first-time homebuyers and bring some stability to our housing market. The credit can be worth up to $8,000 and has already been wildly successful. In Indiana alone, nearly 5,900 Hoosiers have received the credit so far, but time is running out to take advantage of the program.
If you are in the process of buying your first home and are hoping to receive this credit, here are five things you should know:
1. To be considered a first-time homebuyer, you - and your spouse if you are married - must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
2. You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. To qualify for the credit, the completed purchase must occur before December 1, 2009.
3. The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
4. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
5. The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.
Last week, Congress voted to extend the December 1st deadline by one year for service members deployed overseas this year. This will ensure our men and women in the military, intelligence community and Foreign Service are not penalized for their service and can take advantage of this opportunity when they return.
In addition, I am currently working on providing this extension to more homebuyers. I recently co-sponsored legislation, H.R. 3640, that would extend the deadline until December 1, 2010 and open up the credit to all homebuyers purchasing their principal residence.
Extending the deadline is not just good for new homebuyers, it's good for current homeowners too. By boosting home sales in areas that have experienced significant numbers of foreclosures, this credit has begun to stabilize home values for neighborhoods across the country. In addition, new home sales have promoted home construction and realtor jobs in our community; putting our neighbors back to work. It just makes good sense, and I hope Congress will consider an extension soon.