On November 09, President Obama acknowledged the Unemployment Compensation Extension Act (H.R. 3548) into law. As an amendment, this Act included an extension and expansion of the Homebuyer Tax Credit to enable more people in buying a home of their own. All changes in the bill came into effect on November 6, 2009, the day the bill was signed.
This Homebuyer Tax Credit is offered to those individual who are buying homes for the first time and signing a contract by April 30, 2010 and close the purchase by 30th June, 2010. This facility is expanded for current homeowners to $6,500 credit who purchase a new residence. In legislative terminology "current" homeowners must have used the sold home, as their primary residence continuously for five out of the past eight years. Besides this other eligibility requirements also apply including income limits.
These tax credits are only available for a short time and are not likely to be offered in future.
For first home buyers, the option of an FHA loan will allow you to make a smaller down payment than would be required with a traditional loan. The Federal Housing Administration (FHA) also allows first time home buyers to legalize their tax credit for use for the purchase cost of an FHA-insured home, as an added down payment or as closing costs.
The tax amendment was crafted to further bolster the real estate market through the worst of the recession, offering incentives for most of the buyers aspiring to enter the real estate market. A credit has been available to all homebuyers having a gross income of up to $75,000 and November 30 has been the last date for accessing the credit. As sales contracts may take 60 days to complete, time is short for those buyers wishing to get benefit of this credit.
Tax credits for real estate buyers are not a new aspect to the US property market, yet the 2009 credit manifested various distinct benefits compare to previous credits. Buyers, obtained the 2008 credit, are eligible to receive up to $7,500 tax credit and are required to repay the credit within a time span of 15 years.
After the announcement of the credit the US real estate industry certainly has started to revive, with stabilizing prices across the market and gradually increasing in some other region. At this scenario buyers are able to enter the property market and can receive several benefits.
Since the tax credit being introduced, 2 million homes have been purchased using the tax credit benefit after February, eventually achieving the goal of stimulating the real estate market. Property prices have been rising since April, with the number of re-sale property purchases at the all time high in July in the past two years.
Although it is considered that the tax credit has enabled in stirring the real estate market out of the worst of its recession, this tax credit has only been available to a limited strata of public. Bad credit ratings and job insecurity have kept a big chunk of prospective buyers off the real estate market.
As the recent market growth being the gift by the tax credit, any policy warding off extension of the credit will adversely affect the real estate market now. Loan applications are ought to reduce, resulting in fewer purchases and an expected drop in property prices yet again.
The government has been in the real estate loan game since long, through Fannie Mae, HUD and other bodies. The first time home buyers tax credit displays a novel and instant approach to the market.
But don’t get too overwhelmed! This benefit, eventually you have to repay to the government! Anyone who avail the benefit of this program is liable to repay the amount claimed over the coming 15 years while filing their tax returns. A person claiming $8,000 is accountable to pay an additional $533 annually on their federal taxes. That actually is a loan by any means.
This credit applies to both new and resale home buyers. In addition, the Office of Housing and Urban Development (HUD) has declared that home buyers may apply their expected tax credit towards their home purchase instantly instead of waiting until they file their 2009 tax return to get a refund. This fund can be used by the maiden home buyers for down payment or closing costs of their home purchases.
If you are a first-time home buyer, then this low housing prices equipped with the first-time home buyer tax credit benefits makes this a right time to purchase that first home.