The homebuyer tax credit has been expanded and extended — but only until April.

President Barack Obama has signed into law an extension and expansion of the $8,000 first-time homebuyer tax credit, but people thinking of buying a home can’t dawdle if they want to claim it. In order to qualify, a transaction must be completed by April 30 of this year.

Among other provisions, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a qualifying home’s purchase price to $800,000.

“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” said 2009 Florida Realtors’ President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Extending the homebuyer tax credit into 2010 will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”

Studies from economists and housing industry analysts show that the homebuyer tax credit has been working, with home sales increasing and housing inventory declining in recent months, Shelton notes. According to research from the National Association of Realtors, the 2009 homebuyer tax credit has unleashed sales on the lower end of the market and brought into the market up to 400,000 first-time buyers who wouldn’t have bought otherwise. Similarly, in Orlando, sales of existing single-family homes for $250,000 or less accounted for roughly 80 percent of all sales through much of 2009. And sales of existing condos for $50,000 or less alone accounted for nearly half of all condo sales.

Since each home sale generates, on average, about $63,000 in additional economic activity, the 2009 tax credit has contributed approximately $22 billion to the national economy.

“Market activity has certainly picked up; [as of the end of September] we’ve experienced 13 months of increased home sales in Florida,” says John Sebree, vice president of public policy for Florida Realtors. “In addition to bringing new families into the housing market, [the tax credit] has helped stabilize property values. And current owners of Florida properties who will now be eligible for the $6,500 tax credit as [move-up buyers] will also see the added bonus of portability — the ability to take a portion of their Save Our Homes tax savings with them when they move. That is an incredible added incentive.”

While most details of the extension for first-time homebuyers mirror the rules currently in existence, the new law extends the $8,000 tax credit to homes under a sales contract by April 30, with the home purchase under contract completed by June 30. It has been expanded to include a new $6,500 credit for owners of existing homes buying a new principal residence (existing homeowners can claim the $6,500 tax credit if they lived in their principal residence for five consecutive years out of the last eight). And, effective Dec. 1, 2009, income eligibility limits to claim the full credit for both groups of homebuyers were raised to $125,000 for individuals and $225,000 for married couples.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.

---

Homebuyer Tax Credit At A Glance

* Extends through April 30, 2010, the tax credit for first-time homebuyers — up to $8,000 or up to 10 percent of the purchase price of the home.

* Provides a homebuyer tax credit of up to $6,500 to owners who have been in the same principal residence for five consecutive years during the previous eight years and are moving up to a higher-priced property.

* Increases the income eligibility limits to $125,000 for individuals and $225,000 for joint filers.

* Phases out the credit for individuals with incomes above $125,000 for individuals and joint filers above $225,000 at the same rate as current law (over the next $20,000).

* Limits the credit to purchases of principal residences valued at $800,000 or less.