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In finding common ground with both major political parties as a way to help stimulate the reeling housing industry, President Barack Obama signed legislation Nov. 6 that extends the first-time homebuyers tax credit and expands the law to include qualified repeat homebuyers.

Matt Derrick, a spokesman for the Home Builders Association of Greater Kansas City, said passage of the tax credit extension could spur home buying and consumer confidence.

“We’re very excited that President Obama signed the extension and enhancement of the homebuyer tax credit last week,” Derrick said. “We anticipate that this credit will significantly boost homeownership opportunities during the next six months.”

Derrick said the enhanced tax credit would allow more homebuyers to take advantage of the program and help put people back to work.

“Historically the housing market has accounted for 15 percent of our economy. Housing has led the economy out of nearly every downturn since World War II, and in this case it will be essential to a recovery,” Derrick said. “New-home building has an impact throughout the economy through retail sales, dining and entertainment and increased revenue for schools and public services.”

The U.S. Senate earlier passed a bill to extend and expand the popular tax credits, and the House agreed without making changes.

To take advantage of the $8,000 tax credit for first-time homebuyers and the $6,500 credit for buyers who have owned their current homes for at last five years, buyers must have a contract in place by the end of April.

In voting for the bill, Congressman Sam Graves had this to say: “What I heard from realtors, builders and homebuyers was that the first-time homebuyers tax credit was working and that its extension was essential to stabilizing the housing market. Congress should be focused on helping to create jobs and getting our economy back on track. This bill is one step in the right direction.”

Following are some question answered by Matt Derrick of the Home Builders Association of Greater Kansas City:

What is the deadline to qualify for the new tax credits?

Move-up/repeat buyers and first-time buyers must complete their home purchase by April 30, 2010. However, buyers who have signed a binding sales contract by April 30 have until June 30 to close the sale.

What has changed from the earlier tax credit?

The biggest change for first-time buyers is the increase in income limits. The new eligibility limit is $125,000 for individuals and $225,000 for couples. Individuals with an income up to $145,000 and couples with an income up to $245,000 can claim a partial credit. It’s important for buyers to know as well that these income limits are your modified adjusted gross income from your tax return, not your actual income. Homebuyers can also claim the credit against their 2008 tax return, which means you can look at your adjusted income from the tax return you filed this year and know exactly what your income limit is.

Are there any other major changes?

The other major change is the addition of the $6,500 credit for move-up and repeat homebuyers. Homebuyers who have owned the same residence for at least five years at any time during the last eight years before closing on a new home can claim the $6,500 credit. The same income rules from the first-time buyer credit apply. With the addition of the move-up and repeat buyer credit and the increase in income limits, many more homebuyers will now qualify for the credit.

Is the price of a home capped?

Homes with purchase price of more than $800,000 do not qualify, and the credit is limited to 10 percent of the home’s purchase price.

Must the house

purchased be used as a principal residence?

The home purchased must be a principal residence. Move-up buyers may own a second home, but the credit cannot be used to buy a second home.

Can buyers get the money from the credit before filing tax returns?

There are several ways you can do this. One way is by adjusting the withholding on your paycheck, which allows you to increase your take home pay. Another way is to claim the credit against last year’s tax return, which requires filing an amended return and getting a refund from the IRS.

Are there other options that allow buyers to use the credit at closing for a down payment and closing costs?

The state of Missouri offers a loan program that allows buyers to borrow money interest free and repay the loan when they receive their tax income. FHA borrowers can also sell the credit to their lender. Borrowers must still pay a 3.5 percent down payment on their own but can then use the credit for an additional down payment or closing costs.

Liberty Editor Angie Anaya Borgedalen can be reached at 781-4941 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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