President Obama signed the American Recovery and Reinvestment Act (Stimulus Package) into law on Tuesday, February 17, 2009.

Here are some of the highlights of this Act as it relates to the purchase of Real Estate:

First Time Homebuyers (people not owning a home during the past 3 full years) will receive an income tax credit of 10% of the purchase price of the house up to a maximum $8,000.

• This tax credit does not need to be paid back provided the buyer uses the house as their principal residence for 3 full years.


• This tax credit will either reduce the amount of taxes you owe (if you owe more than $8,000) or will increase your refund (if you owe less than $8,000 or if you are already getting a refund.


• This tax credit will be effective on all purchases between January 1, 2009 and November 30, 2009.


• There are income limitations to qualify for this tax credit.  Single tax filers adjusted income cannot exceed $95,000 and the credit amount is reduced (begins to phase out) when adjusted income exceeds $75,000.  Joint tax filers adjusted income cannot exceed $170,000 and the credit amount is reduced (begins to phase out) when adjusted income exceeds $150,000.


• If you sell your house or stop using it as your principal residence within 3 years, the tax credit must be repaid.  This is to prevent utilizing the tax credit to “flip” houses.

This is a great program and a great way for first time home buyers to realize the dream of owning your own home.  It is anticipated that hundreds of thousands of potential home buyers will take advantage of this tax credit, but you must close on your new house no later than November 30, 2009.

 To see how this tax credit can work for you, contact Landro Realtyand keep visiting this website for updates.

Click hereto see more details of the American Recovery and Reinvestment Act.

Click hereto access the First Time Homebuyers Tax Credit IRS Form 5405 for the Tax year 2008.

This information is accurate based on information available as of February 18, 2009.  As with any tax law change, check with a tax advisor or accountant if there are any questions regarding using this provision.