What First Time Buyers need to know about the American Recovery and Reinvestment Act

FEATURE

CREDIT AS CREATED
JULY 2008

APPLIES TO ALL
QUALIFIED PURCHASES ON OR AFTER APRIL 9, 2008

REVISED CREDIT ?

EFFECTIVE FOR
PURCHASES ON OR AFTER JANUARY 1, 2009 AND BEFORE DECEMBER 1, 2009

Amount of Credit

Lesser of 10 percent
of cost of home or $7500

Maximum credit
amount increased to $8000

Eligible Property

Any single family
residence (including condos, co-ops, townhouses) that will be used as a
principal residence.

No change

All principal
residences eligible.

Refundable

Yes.? Reduces (or
can eliminate) income tax liability for the year of purchase.? Any
unused amount of tax credit refunded to purchaser.

No change

Purchasers will
continue to receive refund for unused amount when tax return is filed.

Income Limit

Yes.? Full amount of
credit available for individuals with adjusted gross income of no more
than $75,000 ($150,000 on a joint return).? Phases out above those caps
($95,000 and $170,000).

No change

?

Same income limits
continue to apply.

?

First-time
Homebuyer Only

Yes.? Purchaser (and
purchaser?s spouse) may not have owned a principal residence in 3 years
previous to purchase.

No change

Still available for
first-time purchasers only.? Three-year rule continues to apply.

Revenue Bond
Financing

No credit allowed if
home financed with state/local bond funding.

Purchasers who
utilize revenue bond financing can use credit.

Repayment

Yes.? Portion (6.67%
of credit or $500) to be repaid each year for 15 years, starting with
2010 tax filing.

No repayment for
purchases on or after January 1, 2009 and before December 1, 2009

Recapture

If home sold before
15-year repayment period ends, then outstanding balance of repayment
amount recaptured on sale.

If home is sold
within three years of purchase, entire amount of credit is recaptured on
sale.? Applies only to homes purchased in 2009.

Termination

July 1, 2009?

(But note program
changes for 2009)

December 1, 2009

?

?

Effective Date

Purchases on or
after April 9, 2008 and before January 1, 2009.? Repayment to begin for
2010 tax year.

All revisions are
effective as of January 1, 2009