It's Done! First Time Homebuyer Tax Credit Extended, Program Expanded into 2010!

Earlier today, the drama on whether theFederal First Time Homebuyer Tax Credit would be extended into 2010 came to an end.

As reported on CNN Money.com, by reporter Tami Lubby, President Barack Obama signed a program extension which gives First Time Buyers an $8,000 Federal Income Tax Credit, provided they contract for their new home on or before April 30, 2010 (the transaction must close on or before June 30th).

The extension of the popular First Time Buyer Credit was attached to a bill extending Unemployment Benefits, on a day when the U.S. Unemployment Rate was reported at a 26-year high 10.25%.

It also provides an incentive to purchase another home to many existing homeowners - those who have lived in their homes at least five of the past eight years - of up to $6,500.

For purposes of this legislation, the definition of a First Time Homebuyer is unchanged - the purchaser must not have owned a home within the last three years.

Under the new program, the maximum adjusted gross income for qualifying homebuyers increases to who $125,000 for single taxpayers, $225,000 for married buyers who file joint tax returns. The previous limits on income were $75,000 and $150,000 respectively.

The maximum home price to qualify for the tax refund under this program - $800,000.

Our Chicago Real Estate Team has helped over a dozen first-time buyers find new homes and take advantage of the straight tax refund program thus far in 2009. For many, the credit meant the difference between buying now, or staying on the sidelines to see if declining Chicago Home and Condo Prices would fall any further.

In the last couple of weeks, as the chances for a timely closing before the November 30th credit deadline waned, several of our buyer clients slowed down their home searches, waiting to see if the credit would be extended. This afternoon, our Team received several calls from buyers wanting to resume their search now that the credit extension has been solidified.

Nationally, the National Association of Realtors estimates the First Time Homebuyer Credit has been used by over 1.8 million families. They calculate that roughly 355,000 of these buyers may not have purchased if not for the credit.

Through September, according to the Internal Revenue Service, 1.4 Million taxpayers filed for the credit. Some of these home buyers, however, took advantage of an earlier $7,500 tax credit, in effect in late 2008 and early 2009. This earlier credit required repayment over 15 years, or when the home was sold. The current program requires no repayment.

NAR First Vice President Ron Phipps credits the program with increasing sales to over the 5 Million Units mark. It also has trimmed homes-for-sale inventory, although he was not specific as to number.

The estimated cost of extending the tax credit - roughly $10.8 Billion over the coming 10 years, according to the Joint Committee on Taxation.

Please read our post today via BlogChicagoHomes.com.

DEAN & DEAN'S TEAM CHICAGO