On November 6, 2009, President Obama sigend a bill to extend and expand tax credits for home buyers. Here are some details about the bill.

What is a Tax Credit? A tax credit is a direct reduction in what an individual or couple owes the IRS. In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual or couple is owed. This tax credit does NOT need to be repaid if the individual lives in the home for at least 36 months.

First-Time Home Buyers:

• People who have not owned a home within the last three year
• 10% of the purchase price up to $8,000

Current Home Owners:

• People who have owned and occupied a primary residence for a period of 5 consecutive years in the past 8 years
• $6,500 tax credit

New Deadlines:

• Purchase agreements must be negotiated no later than April 30, 2010.
• Closing date must be no later than June 30, 2010.

Income Limits:

• Single tax filers who earn less than $125,000 are eligible to receive the full tax credit.
• Single tax filers who earn between $125,000 and $145,000 receive partial credit.
• Joint filers who earn less than $225,000 are eligible to receive the full tax credit.
• Joint filers who earn between $225,000 and $245,000 are eligible for partial credit.

Home Price Limit:

• Qualifying buyers may purchase a property up to $800,000.

Eligibility Requirements for First-Time Buyers:

• Anyone who has not owned a primary residence in the past 3 years.
• If either spouse has owned a prmary residence in the past 3 years, neither would qualify.
• An individual who has not owned a primary residence but has a second home or investment property is eligible.

Contract for Deeds and Construction Loans: Buyers who use a construction loan or contract for deed may also file a claim for a tax credit. According to the IRS, factors that demonstrate the ownership of the property include:

• Right of possession
• Right to obtain legal title upon full payment of the purchase price
• Right to construct improvements
• Obligation to pay property taxes
• Risk of loss
• Responsbility to insure the property
• Duty to maintain the property.

Co-Signers: As long as the buyer meets the criteria, a co-signer is allowed.

Other Restrictions: A credit is not allowed if

• A buyer purchases a home from a close relative (spouse, parent, grandparent, child or grandchild.) Step-relatives are allowed.
• The home is not used as a primary residence.
• They are a legal resident.
• Their financing comes from tax-exempt mortgage revenue bonds.