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Coping in tough times: Homebuyers tax break


The Sun Sentinel answers your questions about the downturn every Wednesday. To submit your questions, use the form at the right.

How has the first-time homebuyers tax credit changed with the economic stimulus law?

Under the old law, first-time buyers could get a tax credit up to $7,500 for a home purchased between April 9, 2008, and July 1, 2009. You’d take the credit on your 2008 return. You must pay this credit amount back over 15 years, starting two years after the purchase.

Under the stimulus law, the old law stands. But now, the credit limit is raised to $8,000 and it applies to homes purchased between Jan. 1, 2009, and Nov. 30, 2009. This would not have to be repaid unless you sell the home within three years of the purchase.

The new rules don’t apply to purchases in 2008. So last year’s buyers will have to repay
The confusing part: If you buy in the first half of 2009 but were planning to take the credit on your 2008 return under the old law, you would not get the extra $500 credit.

And although some think they should have been informed about this before they set a date to buy a house last year, the law wasn’t in place until the end of 2008. So all who bought houses April 8, 2008 or earlier are simply not eligible for this credit.

Categories: Coping in Tough Times (21)
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Comments

I've been looking to purchase a property for the past year or so and have been hesistant to do so because of the falling prices. I still want to take advantage of this credit, but will wait towards the end of the year to buy. I'm hoping prices can come down the next couple of months and I can close in October or November 2009.


Thanks so much for posting information like this on your blog. I am in the process of purchasing a home and I sent this story to my realtor and mortgage advisor.

They didn't know yet what the effect of the bill were for first-timers. We all know now. Thanks again.


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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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