Lennar Communities

President Obama today signed the $787 billion American Recovery and Reinvestment Act into law. What does that mean for home buyers? If you are a First-Time Homebuyer then the time to buy is now. If you have not owned a home for three preceding years and area a U.S. Citizen then you qualify for an enhanced home buyer tax credit for ten percent of the purchase price, up to $8,000 for a single resident or a married couple filing jointly.

This is an $8,000 credit, not a loan – you do not have to pay it back! More details on the new law as it pertains to First-Time Homebuyers:

• Effective Dates: Closing that occur on January 1, 2009, through November 30, 2009
• Amount: Ten percent of the purchase price up to a maximum of $8,000 for a single resident or a married couple filing jointly.
• Eligibility: First-time home buyers. Defined as homeowners who have not owned a home for three preceding three years. Plus, it is only available to U.S. Citizens.
• Principal Residences: The tax credit is available for purchases of principal residences. Purchases of vacation homes and rental property are not eligible.
• Repayment: The repayment requirements of the prior tax credit do not apply to purchases made between 01/01/2009 and 11/30/2009, unless the taxpayer sells the property within three years.
• Income limits: The credit is phased-out based on the buyer’s modified adjusted gross income (MAGI). MAGI is your adjusted gross income plus various amounts excluded from income—for example, certain foreign income, health and flexible spending accounts and 401K contributions. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.
• Refundable: The tax credit reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar. It is fully refundable, meaning that the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax that they owe.

Click here to view more frequently asked questions about the Home Buyer Tax Credit on the National Association of Home Builders website. Also, click here for full details on the American Recovery and Reinvestment Act.