Take Advantage of the Homebuyer Credit Before It Expires


In an attempt to jump start the real estate market, Congress passed the Worker, Homeownership, and Business Assistance Act of 2009, which was extended earlier this year.

 What Is It?

 Here are some highlights of the legislation as it stands now: 

  • A “first time home buyer” tax credit of up to $8,000.
  • A “repeat home buyer” tax credit of up to $6,500.
  • If the home was purchased in 2009 or later, the credit does not have to be “repaid”.
  • The credit is “refundable”, meaning that even if you don’t owe taxes, you can still claim the credit.

 Who Qualifies?

 To qualify as a New Home Buyer you must have not owned a home in the past 3 years.  To qualify as a Long Time Resident, you must have owned a home as your primary residence for 5 consecutive years out of the last 8 years.

 The Fine Print 

As with any government program, there’s always fine print: 

  • Both credits come with income limitations.  The credit begins to phase out if your Modified Adjusted Gross Income (MAGI) is $125,000 for single tax payers and $245,000 for married taxpayers filing jointly.  You become completely ineligible if your MAGI exceeds $145,000 and $245,000 respectively.
  • The credit is not an automatic $8,000 or $6,500 but is actually 10% of the sales price up to a maximum of $8,000 or $6,500.
  • Homes over $800,000 do not qualify.
  • You can’t claim the credit if you’re being claimed as a dependent on somebody else’s tax return or if you’re under the age of 18.

 Why Act Now? 

  • It’s a TAX CREDIT, not a tax deduction.  This means that it will offset your tax liability dollar-for-dollar.
  • It’s highly likely that the government WON’T extend this legislation further.
  • Many real estate markets have become affordable, but they won’t stay that way.  Most experts feel that the real estate markets in many areas are at or near bottom.


As a Wealth Manager, I would never encourage a client to buy a home simply because of a tax credit.  If however, you’re already looking for a home, have found one that you can afford, and plan to stay in the home for more than a couple of years, now is a great time to buy.

As with any large purchase, always check with your CPA, realtor and other financial professionals before entering into a contract.