Home buying in the US is expected to get a discernible nudge in the immediate future, with the Extended Home Buyer Credit made available by the federal authorities. Let’s discuss who can – and more pertinently, whether or not you can – benefit from its financial provisions.

The Two Categories of Beneficiaries

There are two categories of persons who qualify for credit under the new law. The first is the first-time homebuyers who buy a home between November 7, 2009 and April 30, 2010. A person is deemed a “first-time homebuyer” only if she or her spouse had not owned a house three years prior to the purchase. The maximum credit allowable to first-time buyers is $8,000.

Single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 become eligible to receive the maximum credit. The amount of credit that you can get decreases for single buyers who earn between $125,000 and $145,000, as well as for couples who make between $225,000 and $245,000. The tax credit that you can get is reduced as you near the higher brackets of the margins mentioned above. Beyond these limits, no credit is given. Finally, credit can only be obtained on homes purchased for $800,000 or less.

The second category of persons who stand to gain from this credit provision is that of current homeowners who buy a house between November 7, 2009 and April 30, 2010. However, they must have lived in the home being sold or vacated as their prime residence for at least five consecutive years during the last eight years. The maximum credit that they can get is $6,500.   

Certain Related Clauses of Credit

Additionally, if you enter into a written binding contract to purchase before April 30, 2010, you have time to close the transaction until July 1, 2010, to still obtain the credit under this program.

Furthermore, the buyer will not have to repay the credit if they occupy the property for a period of three years or more. In the event that the buyer sells the property within this three-year frame, the entire amount of the credit will be returned from the proceeds of the sale.