There is good news for first-time homebuyers and buyers who have lived in their current homes for more than 5 years.  President Obama signed the Worker, Homeownership, and Business Assistance Act of 2009 into law on November 6, 2009.  The legislation allows a tax credit of 10% of the purchase price of a home up to $8,000 for taxpayers, with incomes under $125,000 for single filers or $225,000 for joint filers, that have not owned a home in three years prior to the purchase.  A reduced credit is available for single taxpayers with incomes between $125,000 and $145,000 and married taxpayers with incomes between $225,000 and $245,000.  The time frame for the credit has been extended until April 30, 2010.  Taxpayers who enter a binding contract to purchase by April 30, 2010 have until June 30, 2010 to close to be eligible for the credit.

The new law offers a credit of up to $6,500 for some existing homeowners.  The new credit is available to homebuyers who have lived in their current residence for a consecutive five-year period in the past eight years. The new credit is not retroactive; it applies to purchases after November 7, 2009.

The law provides some additional benefits for military personnel.  Those who were on duty outside the US for 90 days between January 1, 2009 and April 30, 2010 have until April 30, 2011 to enter into a binding contract to purchase and until June 30, 2011 to close to be eligible for the credit.  Most taxpayers are required to repay the credit if they cease to use the home as their principal residence within 3 years of the purchase date.  Military personnel who are called to duty before the 3-year period are not required to repay the credit.

See our Homebuyer Credit fact-sheet for more information regarding the new credit.