ERA Today Realty Blog - Southern Maine Real Estate News & Events

This is even better news for first-time homebuyers than the tax credit announced in April 2008 because not only has the tax credit maximum increased from $7,500 to $8,000 — but more significantly — it does not need to be repaid unless the individual re-sells the home within three years.

As you may have heard, significant improvements in the temporary First-Time Homebuyer Tax Credit were signed into law on Feb. 17 as part of the American Recovery and Reinvestment Act of 2009 to provide a housing stimulus for first-time home purchases that occur between Jan. 1 and Dec. 1, 2009. This is even better news for first-time homebuyers than the tax credit announced in April 2008 because not only has the tax credit maximum increased from $7,500 to $8,000 — but more significantly — it does not need to be repaid unless the individual re-sells the home within three years. There are several notable points about this federal income tax credit that I have bulleted for your convenience so you can easily explain the highlights to potential first-time homebuyers. They are: Credit maximum was increased from $7,500 to $8,000. The credit is calculated as 10% of the purchase price. Example: If the purchase price is $70,000, the credit is $7,000. Removed the repayment requirement, provided the homebuyer does not resell the home for three years. Eligibility remains for first-time homebuyers only. In this case, a first-time homebuyer is defined as an individual who has not owned a primary home at any time during the three years prior to purchase, but who may have done so prior to that time. Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single. To be eligible for the full tax credit, the homebuyer can have an annual adjusted gross income of no more than $75,000 ($150,000 on a joint return). A homebuyer with an annual adjusted gross income above that level and up to $95,000 ($170,000 on a joint return) is eligible for a reduced tax credit. The tax credit can be claimed on one’s individual or joint tax return for the purchase of any single-family home between Jan. 1, 2009 and Dec. 1, 2009. It can be claimed on a 2008 tax return (to be filed by April 15, 2009), an amended 2008 tax return, or a 2009 tax return. Individuals should consult a professional tax advisor for exact tax calculations and timing. To further assist you in communicating this good news, ERA Real Estate has created the Consumer Guide chart that explains these important points and a feature article in My PR Agent, entitled “First-Time Homebuyers Federal Income Tax Credit Improved and Extended,” that you can send to the local media in your area. In addition, the National Association of REALTORS® has prepared a Major Modifications Chart that brokers/agents can use to understand the improvements made in the tax credit since last April. We have also attached a PowerPoint presentation summarizing the First-Time Homebuyer Tax Credit for your use during first-time homebuyer seminars in your local market and in individual client meetings. Be sure to note that you are not a tax or legal professional, and of course encourage homebuyers to use their own advisors. Keep in mind that this tax credit is retroactive. You should reach out to your recent first-time homebuyers who closed on or after Jan. 1, 2009 or are currently under contract to close in the near future. Plus, this is a great opportunity to call your customers and potential buyers and help get this important message out to those who can reap the benefits associated with it. Thank you for your support. Sincerely, Brenda W. Casserly President & CEO ERA Franchise Systems LLC