U.S. President Obama has recently signed into law a bill that extends and expands the federal income tax credit for homebuyers. Now, both first-time homebuyers (those who have not owned a home in the previous 3 years) and move-up homebuyers (those who have lived in their current property for 5 consecutive years) can enjoy this Real Estate Tax Benefit.
The salient features of this new law are as follows:
1. First-time homebuyers are entitled to receive up to $8,000 tax credit, while move-up homebuyers will receive up to $6,500 tax credit.
2. Tax credits are extended until April 30, 2010. This means that all contracts must be written by April 30, 2010, and all properties must close by June 30, 2010.
3. Income limits for both first-time homebuyers and move-up homebuyers are $125,000 for an individual and $225,000 for a family with an additional $20,000 phase-out of the credit.
4. The property that must be purchased by both first-time homebuyers and move-up homebuyers must not exceed $800,000.
This recent development is seen as beneficial for both the U.S. economy and the real estate industry. According to the National Association of Realtors and Mark Zandi of Moody’s Economy.com, for every home sold in the U.S., one job is created over the next 12-month period, and approximately $60,000 goes into the local economy. This shows that housing is vital to the recovery of the U.S economy.