Tax credit for home purchase could rise, by Stephanie Armour, USA TODAY

Lawmakers and businesses are calling for expansion of a tax credit for first-time home buyers that has helped spark home sales in an otherwise dismal real estate market.
With the tax credit scheduled to expire in fall, some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home.
First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.
The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package. The proposals may face headwinds amid growing public criticism of government spending to rescue the economy and the widening budget deficit.
Some economists say a tax benefit is vital to spur home buying and help stabilize prices.
"I'm fairly confident that (Congress) will extend the tax credit, because it is so important that housing come back," says Bernard Baumohl, an economist at the Economic Outlook Group. "But raising the tax credit will be difficult because it reduces taxes even more."
The White House had no immediate comment.
Current proposals:
•A Senate bill to expand the tax credit to $15,000 for any home buyer regardless of income was introduced this month by Sen. Johnny Isakson, R-Ga. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn.
"It would go a long way toward inducing trade-up buyers into the market," says Lawrence Yun, chief economist at the NAR.
•A House bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance. (article courtesy of Rose Kelly)

First-Time Homebuyer’s Credit by Craig A. Vidal, CPA

Individuals who qualify and buy homes this year may qualify for the first-time homebuyer’s credit.

The credit is 10% of the purchase price of the home up to $8,000 and is claimed on their 2009 tax return. The house must be purchased between January 1, 2009 and before Dec. 1, 2009. They also have the option to take the credit on their extended 2008 income tax return or by amending a previously filed 2008 income tax return. They can get the money sooner by claiming the credit on their 2008 tax returns. However, each situation is different and must be evaluated based upon the individual's facts and circumstances.

To qualify, a first-time homebuyer is defined as someone who has not owned a primary residence during the three years prior to the date of purchase. For a married couple, neither of the spouses can have owned a primary residence within the past three years. A primary residence is defined as the home in which you live for the majority of the time.

Unlike the credit for 2008 first-time home purchases, the credit for 2009 purchases does not have to be repaid as long as the buyer or buyers remain in the home for three years from the date of purchase.

The first-time homebuyer credit begins to phase out for taxpayers whose modified adjusted gross income exceeds $75,000, or $150,000 for married taxpayers filing jointly.

NOTE: The credit cannot be claimed until the purchase of the home is final.

Take advantage of the new homebuyers' tax credit with JumpStart

Click on the title line above to read details about CHFA's new JumpStart program for first time homebuyers and those who have not owned a home in the last three years.