I understand that the 2009 tax credits for first-time homebuyers had an impact in improving the real estate market. Have those credits been extended into 2010?

Yes, you are correct, the first-time home buyer credit had positive effect on the real estate market by encouraging a lot of first-time home buyers to get into the market and buy their first home. In order to continue to help the residential real estate market rebound, Congress extended and expanded the homebuyer tax credit. The first-time home buyer credit is in the amount of $8,000. To qualify the buyer may not have had an interest in a principal residence for three years prior to the purchase. The extension is through April 30, 2010. In order to qualify the purchaser's income must not be greater than $75,000 or a married couple $150,000. In addition to the first-time home buyer credit there is a new credit for owners of existing homes. The amount of this credit is $6,500 and applies to people who have owned their home as a principal residence consecutively for five years of the previous eight years. The tax credit ends on April 30, 2010 but so long as the purchaser has entered into a written contract prior to April 30, 2010 the purchaser will have until July 1, 2010 to close. The income limitations are $125,000 for a single person and $225,000 for a married couple. The limitation on the purchase price is $800,000. This latter provision for the existing homeowner is an attempt to stimulate the “move up” by encouraging the existing homeowner to sell their entry-level home for a bigger and  more expensive home thus making more inventory available to first-time home buyers  and encouraging the empty nester  to sell their house to move into something smaller, the result of all of which is to get movement back into the residential real estate market. As a famous quote states “nothing happens until somebody sells something.”

If you have questions about this or any other legal matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.