As some of you may have heard, the American Recovery and Reinvestment Act which is part of the recent bill that was signed by the president on February 17th now provides for an up to $8,000 tax credit for first time home buyers! There was a previous bill in place that was part of last year’s Housing and Economic Recovery Act. This credit was for $7,500. Also, with the credit from 2008, home buyers have to pay back the credit starting two years after the credit is claimed (2010). This will enable the credit to be paid back over 15 years.

The new tax credit:

* Available on purchases Jan 1, 2009- Dec 1, 2009

*Non-refundable (you don’t have to pay this back!)

* Dollar for Dollar credit on taxes- This is different from a deduction which lowers your taxable income. This credit actually lowers your tax liability. So for example if you are getting back $1500 and you qualify for the full $8000 credit, you would actually get back $9500!

*Income limits- The income limit on this bill is $75,000 for singles and $150,000 for joint. The good thing is that even if you make over these amounts you can still get a partial credit (see link below to see how this is calculated). The credit will not be extended to anyone who makes over $90,000 single and $170,000 joint.

This is great news! For detailed info from National Association of Realtors click here

If you know of anyone who is thinking of buying, please let me know. This is a great incentive for first-time buyers!

**We are not tax accountants and although information is deemed reliable, you should speak to an accountant***