SPRINGFIELD (February 19, 2009) — Buy a home, get a tax break. The latest federal economic stimulus plan includes an $8,000 tax credit for first-time buyers who purchase a home on or after Jan. 1, 2009 and before Dec. 1, 2009. And unlike previous tax credits for first-time buyers, this one doesn’t have to be repaid.

“This tax credit is great news for people who have been thinking about buying their first home. Not only does it mean more money coming back to them in today’s economy, but it gives them one more incentive to take the plunge into homeownership in what is arguably one of the best buyer’s markets in years,” says Nancy Long, president of the Capital Area Association of REALTORS®. “And because this tax credit doesn’t have to be repaid like last year’s $7,500 credit, it represents a true credit for those who buy in 2009.”

The $8,000 tax credit is part of the American Recovery and Reinvestment Act of 2009 that was recently signed into law by President Barack Obama. The National Association of REALTORS® estimates the new tax credit will boost first-time buyer home sales by 300,000 this year.
Details of the tax credit include:

• The temporary credit is only available for home purchases made from Jan. 1, 2009 to before Dec. 1, 2009 and is equal to 10 percent of the cost of the home, up to a maximum credit of $8,000.

• Buyers claim the credit on their federal tax return to reduce their tax liability. If the credit is more than the taxes owed, the buyer will get a refund check for the difference.

• Only first-time homebuyers can take advantage of the tax credit. A first-time buyer is defined under the tax credit as an individual who has not owned a home in the last three years. Eligible properties include anything that will be used as a principal single-family residence – including condos and townhouses.

• There are income guidelines on the credit. Individuals with an adjusted gross income up to $75,000 (or $150,000 if filing jointly) are eligible for the full tax credit. The credit is phased down for those earning more and is not available for those with an income above $95,000 (or $170,000 if filing jointly).

The new tax credit does not have to be repaid if the buyer stays in the home at least three years. But if the home is sold before that, the entire amount of the credit is recaptured on the sale.

People who purchased homes under last year’s $7,500 tax credit will still be required to repay that credit to the government over a 15-year period.

The latest economic stimulus package also reinstates higher loan

-more-limits on the popular Federal Housing Administration (FHA) loans as well as conforming mortgage loans through Fannie Mae or Freddie Mac until the end of 2009. Loan limits had dropped in some markets at the beginning of 2009, but the economic stimulus plan temporarily raises them, giving people more buying power when looking for a home.

“There are some great incentives for first-time buyers and with historically low interest rates and a good supply of affordable homes, now is the time to buy,” says Long. “REALTORS® can educate buyers about the tax credits and financing options that are available while also offering their expertise on the local market and the home buying process.”

For more information about buying a home, go to www.SeeHouses.com or www.YourIllinoisHome.com, a consumer site developed by the Illinois Association of REALTORS®.

The Capital Area Association of REALTORS® is the Voice for Real Estate in the Capital Area representing more than 700 members involved in all aspects of the real estate industry. The Capital Area’s Resource for Real Estate Information can be found at www.SeeHouses.com.

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