Op Ed: More Help For Would-Be Homebuyers

Op-Ed

A new law provides extra incentive for Northern Ohio families who are looking for their first home--or who might be in the market for a different principal residence.

The Worker, Homeowners and Business Assistance Act of 2009, which Congresswoman Kaptur supported, extends the deadline for purchasing and closing on a home and raises the income limitations for homeowners claiming the credit. The new legislation, which President Obama has signed into law, extends and expands the provisions of the popular homebuyer tax credit program that was implemented earlier this year as part of the American Recovery and Reinvestment Act (the economic stimulus bill).

The new provisions will extend the homebuyer credit to thousands of taxpayers beyond the estimated 1.4 million families who have claimed it already, chiefly by making the credit available for the first time to long-term homeowners buying a replacement principal residence. A previous version of the law limited its provisions to first-time homebuyers.

The initial legislation, which was designed to boost the housing market during the recession, provided for a first-time homebuyer credit of $8,000 or 10 percent of the purchase price of the house, whichever is less, for purchases made in 2009 before Dec. 1. Moving forward, the credit after December 31, 2009 will be up to $7,500 for most homebuyers.

The new legislation extends eligibility to taxpayers who have a binding contract to purchase a home before May 1, 2010. Buyers must close on the home before July 1, 2010.

For qualifying purchases, taxpayers have the option of claiming their credit on either their 2009 or 2010 return. Income limitations: under the new law, a taxpayer is eligible for the full credit, which begins to phase out at $125,000 modified adjusted gross income for single filers and $245,000 for joint filers. (Existing phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009.)

Long-time homeowners who buy a replacement principal residence may claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.

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