First-time home buyers’ credit extended

President Obama signed legislation that extended the tax credit for first-time home buyers and added a new credit for some existing homeowners.

"The tax credit has already proven to be an effective means of boosting economic activity," says Joe Robson, chairman of the National Association of Home Builders, in a press release. "We hope that the government's action to enhance it will have the intended additional stimulative effect that will help get housing and the economy back on solid ground."

The new law extends the $8,000 first-time home buyer credit through April 30, 2010, giving buyers who have signed a sales contract by that deadline until June 30 to close their deal. A new credit of up to $6,500 was created for repeat home buyers who buy a principal residence if they have been residing in the home they currently own (or previously owned) for five consecutive years out of the eight years preceding the purchase of the new home.

"It's not just a first-time buyer tax credit anymore," Robson says. "Move-up buyers, move-down buyers, and others who have previously owned a home can now qualify as well. In fact, close to 70 percent of all potential home buyers should now qualify for some form of the credit."

Income limits for eligible buyers have also been increased to allow more consumers to qualify, particularly those in markets with a higher cost of living. Now single taxpayers with incomes up to $125,000 and married couples earning up to $225,000 could be eligible. Partial credits are available to home buyers who earn up to $20,000 more than the limits.

The NAHB estimates that the home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes

For information, visit the NAHB's Web site at www.federalhousingtaxcredit.com.