New legislation extends a tax credit of up to $8,000 for qualifying first time home buyers that was previously set to expire on November 30, 2009. 1st time buyer tax credit

If you are a first time home buyer (one who has had no ownership interest in a principal residence in the United States in the last three years), you will qualify for the credit if you purchase a home or have one under contract by April 30, 2010 (closing by June 30, 2010).

Equally as exciting — if you are an existing homeowner, you qualify for the new tax credit of up to $6,500 if you have lived in your current residence for five years or more out of the previous eight years and purchase a home or sign a purchase agreement for one from November 7, 2009 to April 20, 2010 (closing by June 30, 2010).

Both credits are available for the purchase of “principal residences” with prices up to $800,000. The credits start to phase out for individuals with incomes above $125,000 and for joint filers who earn more than $225,000. Previously, the credit for first-time home buyers phased out for individuals with incomes above $75,000 and for joint filers with incomes above $150,000.

You will need to live in the home for three years after the purchase so you don’t have to pay the credit back. You can claim the credit for your 2009 taxes even if you buy the home next year. Talk to a tax accountant of how to file.

There are some special rules for those in the military so that they may take advantage of the credits as well.

This news is very encouraging for our local housing market. Not only does it extend benefits for those wish to purchase their first home — but also for repeat home buyers. Previously, most of the homes sold were lender mediated and very low priced. This helps to spark “move up” and second home buyers and stimulate traditional home sales.

If you’re in the market for a new property contact me and let’s get started.