President Barack Obama has signed legislation to extend the homebuyer tax credit.
Passage of the bill was widely expected to further spur economic recovery in the housing sector, as more buyers are now eligible for tax breaks under the new law. The $8,000 first-time homebuyer tax credit was originally set to expire Nov. 30.
In addition to offering the $8,000 first-time homebuyer tax credit, the law also allows a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more.
The tax credits are available to buyers who sign purchase agreements on a new or existing primary residence between Dec. 1 and April 30. Buyers would have until June 30 to close on their new homes.
There is an $800,000 price limit on all homes eligible for the credit. The income limits for all buyers are now $125,000 per year for individuals and $225,000 for married couples. Under the old program, the limits were $75,000 and $150,000 respectively. The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.
— Craig Greene is a senior loan officer at Prospect Mortgage, 3916 State St., Suite 100, Santa Barbara 93105. He can be reached at craig.greene@prospectmtg.com or 805.898.4211.