There are limitations to receiving the credit. It is only available to buyers whose income is 75k if they're single or 150k if they’re married filing jointly, though higher income families can qualify for a partial credit. They also must reside in the new home for a minimum of 3 years or be obligated to repay the credit in full. In addition, they can't have owned a home in the past 3 years and the purchase must be made before November 30. Getting the credit is a simple matter of claiming it on your tax return. Home buyers who've already filed for 2008 can file an amended return and still receive the credit.
The real estate industry approves of the new credit, which is an improvement over a $7500 credit passed in July, which was basically a low interest loan instead of an actual tax credit. However, the industry would have preferred the Senate’s proposal of a $15k tax credit that would have been available to all homebuyers. Experts estimate the credit will spur an extra 300,000 new homebuyers into the market.
Families wanting to buy a home but unable to generate cash for a down-payment will not be helped by the credit as they must close the deal before claiming it. Missouri has come up with a solution to this issue by instituting a short-term loan of $6750 against the federal tax credit. The state would loan the money to mortgage companies to apply towards down-payments. The buyers would then pay back the state when they received their refunds. A representative of the National Association of Home Buyers thinks that other states may pass similar legislation.
Many home buyers will look at the credit as a discount on the purchase price of their new home as, effectively, a 110k home becomes a 92k home. This should serve to convince buyers on the fence due to fears of buying and watching their new home's value drop. The credit could also help with un-expected expenses common with a new home or furnishing the home.
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