Who Qualifies for the First Time Home Buyer Tax Credit - Who qualifies: First-time buyers and those who have not owned a home in three years. To claim the full amount, single buyers must have a modified adjusted gross income of $75,000 or less; for married buyers, that number is $150,000. Single buyers making more than $95,000 or married couples making more than $170,000 do not qualify.
How it works: A buyer purchases a home and then claims the credit on his federal income tax return. The credit offsets taxes the buyer might owe. If the buyer owes only $5,000 in taxes but is eligible for the full $8,000 credit, he gets a check for the difference $3,000. Buyers can amend their 2008 tax returns or claim the credit on their 2009 returns.
How it could change: Real estate trade groups are lobbying the government to extend the credit program for six months to a year. Some proponents want the credit amount increased to $15,000. Others are pleading for a credit for anyone who buys a home not just first-timers. The Obama administration is studying the issue, and legislators have introduced a variety of bills in Congress. First-time homebuyers, who closed this month, have been scurrying to make their purchases before a federal income tax credit program expires Nov. 30.
Buyers, builders, analysts and economists laud the credit for putting a spark back into the nation's stricken housing market. Trade groups, including those representing Ohio builders and real estate agents, are lobbying Congress to extend the credit, and the Obama administration is taking a close look at it.
The issue frames a common debate in this recession: How much should we spend to spur the sputtering economy? The credit's proponents worry that when it disappears, improvements in the housing market - and the broader economy - will fade away. But skeptics question whether it's worth spending billions of dollars to sustain the program.
There are no firm statistics showing how the credit has affected home sales since its debut in late February. The Internal Revenue Service says 48,671 Ohio taxpayers have taken advantage of either this year's credit or a $7,500 interest-free loan the government offered first-time home buyers last year. Nationwide, 1.4 million families have filed for the credit or the loan.
Real estate groups estimate that up to 40% of all home buyers this year will qualify for the credit, of up to $8,000. That shakes out to 1.8 million to 2 million buyers, according to estimates from the National Association of Realtors. The trade group, leading the push to extend the credit, admits that many of those people would have bought a home anyway. But the Realtors estimate that the credit could be solely responsible for 350,000 or so sales not a shabby number during a housing slump.
