First Time Homebuyer Tax Credit
After the 2008 housing market crash and subsequent recession, the Federal Government decided to incorporate a first time homebuyer tax credit to stimulate the ailing housing market. Designed to give a monetary incentive to those considering a home purchase, the tax credit was enacted as part of the Housing and Economic Recovery Act of 2008. The American Recovery and Reinvestment Act of 2009 extended it into 2009, and then the Worker, Homeownership and Business Assistance Act of 2009 again extended it until September of 2010. Read on for more information on the first time homebuyer tax credit and how it worked.
- The 2008 first time homebuyer tax credit. Because lawmakers were still uncertain as to how deep the coming recession would be, the 2008 version of the tax credit was a little less generous than later incarnations. In this version, those who bought a home in 2008 were eligible for a tax credit of up to $7,500. The catch, however, was that the credit wasn’t really free money. In fact, it was more like an interest free loan. Those who claimed it entered into an agreement that has them pay the money back in yearly installments.
- The 2009 first time homebuyer tax credit. As the recession grew worse and the housing market continued to struggle, it became clear to the Federal Government would need a stronger incentive to entice potential homeowners to pull the trigger. In response to this realization American Recovery and Reinvestment Act amended the first time homebuyer tax credit. First and foremost, they removed the stipulation that stated the credit needed to be repaid for those who made home purchases in 2009. Other terms, including the maximum credit amount and income level qualifications, remained almost exactly the same. This version of the credit remained in effect until December first of 2009.
- The 2010 extension. The Worker, Homeownership and Business Assistance Act, passed in the late months of 2009, extended and again amended the first time homebuyer tax credit. In terms of qualifications, the credit was expanded to previous homeowners purchasing a new home, not just first-timers. The temporal extension, meanwhile, was carried all the way to homes purchased before April thirtieth of 2010. This would prove to be the last extension. All in all, the credit is generally considered to have made a decent dent in the gaping hole that was the post-crash housing market. Well over a million families took advantage of it, helping to improve both their own quality of life and the American economy as a whole.