Purchase Arizona Real Estate with Oggy Karchev of Realty ONE Group

FIRST TIME HOME BUYER TAX CREDIT REVISED:

$8,000 TAX CREDIT TO TAKE EFFECT WITH NEW BILL

After debate over the final dollar amount of First Time Homebuyer Tax Credit, the new economic stimulus bill awaiting President Obama's signature on Tuesday will contain an $8,000 tax credit for owner occupant home buyers. First-time buyers can claim the credit worth $8,000 or 10% of market value of home, whichever is less either on their 2008 or 2009 taxes.

This credit will be refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of withholding they paid during the year plus anything extra they had to pay when they filed their returns - was less than that amount.

To qualify for the credit, potential home owners must have purchased January 1, 2009 or later and will have up until November 30, 2009 to close on their new home. Buyers may not have owned a home in the last three years to qualify as first time homebuyers. They must also owner occupy the purchased home for at least three years, or they will be obligated to pay back the first time homebuyer credit over a certain period of time.

Additionally, there are income restrictions to this tax cut: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. In some cases, higher income producing buyers may also be eligible for a certain portion of the homebuyer tax cut but not the full $8,000 or 10% of market value.

In addition, applying for the credit will be easy. The first-time home buyer will be able to just claim it on their return. No other forms or papers have to be prepared or filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the tax credit.

This new plan improves on the current $7,500 tax credit, which was passed in July and was more of an interest free loan than an actual credit. But it did not go as far as a proposed a $15,000 non-refundable credit for all homebuyers.

According to the National Association Realtors, the $8,000 tax credit will bring an additional 300,000 new homebuyers into the market between now and its expiration on November 30, 2008 which should somewhat improve the Arizona housing market. The true impact on the Arizona Real Estate Market is yet to be determined, but the credit is a step in the right direction to help further stimulate the housing market.