If you thought you missed your chance of $8,000 from the government, think again!  Buy a home before May 1 and collect up to $6,500 from the government.  If you’re a first-time homebuyer, get up to $8,000.  That’s right…President Obama is set to sign an extension of the $8,000 first-time homebuyer tax credit and this new bill also includes a credit for current homeowners.

Already passed by the Senate, the House voted 403-12 Thursday to expand on the current $8,000 first-time homebuyer tax credit.  Included in the bill is an extension of unemployment benefits and expands a tax break for money-losing businesses.  It is expected that President Obama will sign the bill today.

Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers — or people who haven’t owned homes in the previous three years — could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes.

The credit is equal to 10 percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for others.

Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that were included in a bill extending unemployment benefits for those without jobs for more than a year. The other tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years.

That break would help industries that have suffered big losses in the recession, including retailers, homebuilders and newspapers.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

Pending home sales rose rose 6.4 percent from July to August, to the highest level in more than two years, the National Association of Realtors reported.

August marked the seventh straight month of increases in NAR’s pending home sales index.

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The recovery of the real estate market depends on first time home buyers.  Not only do they represent a large number of sales, but without them there would be no move-up market.  Current homeowners would not be able to move-up if they can’t sell their current homes.

HUD now says that first time homebuyers who qualify for the federal tax credit can apply as much as $8,000 to the down payment when financing a home with a FHA loan.  FHA currently requires that buyers make a minimum down payment of 3.5 percent of the sales price of the home…this means that a first time homebuyer can borrow as much as $228,500 and buy with no money down!

Four important things to keep in mind:

1. You don’t qualify if you have owned a home during the three years before you plan to purchase.
2. You must close before December 1, 2009
3. Your income must not exceed $75,000 if single and $150,000 if married.
4. You can’t use the credit against the down payment from just anyone, it must come from state housing agencies or certain non-profits.

If you are a first time homebuyer the time to act is now.  A closing by December 1st, 2009 means you ought to have a contract written by November 1st, and to write a contract you ought to begin looking for homes in September and October.  Even if you were to follow this schedule you may still be cutting it close.  ACT NOW and contact us!