Changes to Tax Credit

New Stimulus Plan Offers Changes to The Housing Credit. The main ones are listed below:

• The credit amount is increased from $7500 to $8000.
• The credit continues to apply only to first-time homebuyers.
• Changes are effective for purchases on or after Jan 1, 2009 and before Dec 1, 2009.
• 2009 purchasers can make an election to claim the credit on their 2008 tax return.
• The credit is refundable. The amount of the refund is computed as part of the 1040 tax return filing.
• The unpopular repayment feature of the 2008 version is eliminated for 2009 purchasers. Unfortunately, eligible 2008 purchasers will still be required to repay the credit.
• While the repayment is eliminated for 2009, any credit that is taken for 2009 will be recaptured and paid to the IRS from sales proceeds if the residence is sold within three years of the date of purchase.
• DC homebuyers are eligible for the $8000 credit (In 2008, DC homebuyers had a separate, nonrepayable $5000 tax credit available to them that had already been in effect for several years.)
• Purchasers who finance their 2009 purchases with funds from a state/local housing bond authority will be eligible for credit.

*Contact your tax advisor for your specific situation.