To qualify for homebuyers credit for first-timers, act quickly

Some 1.4 million Americans have tapped the special tax credit, part of the stimulus spending. But time is running out on the program – unless Congress renews it.

By , Staff writer

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    First-time homebuyer Charles Curtis stands across the street Thursday from a high-rise residence in New York he hopes to buy.
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This year 1.4 million Americans have tapped a special tax credit for home buyers. Is there still time to take grab this $8,000 benefit?

Maybe, but you'd need to act fast – although it's also possible that Congress will extend this tax break, part of the economic stimulus plan, beyond its Nov. 30 cutoff.

The tax credit is designed to stimulate homebuyer demand during a historic housing slump. On that front, it has helped. Cities across the nation are showing signs of housing-market stabilization.

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The Internal Revenue Service said Wednesday that 1.4 million taxpayers have benefited so far. For comparison, sales of pre-owned homes are running at an annualized pace of about 5 million. Housing experts say many of the tax-break recipients would have bought a home anyway, but that many others have timed their move with the credit in mind.

To be eligible, the IRS says residents must:

•Close on a home purchase by Nov. 30. Given the paperwork and processes involved, that means striking a deal very soon.

•Not have owned a home in the past three years.

•Have modified adjusted gross income below $95,000 (or $170,000 if filing jointly). People within $20,000 of those caps will get a smaller credit.

•Not be buying the home from a relative.

•Use the home as a residence, not a vacation or rental property.

The credit is 10 percent of the purchase price, up to a maximum of $8,000. Some good news: It's fully refundable. You get the credit even if you owe less than that (or nothing at all) in federal income tax.

Economists are divided about the virtues of the program, which is part of the economic stimulus act President Obama signed in February. Some say it has provided a needed nudge forward for housing markets, and now can fade away.

Others worry that real estate activity will sag – endangering a nascent economic recovery – without such incentives.

On Thursday, Senate majority leader Harry Reid endorsed the idea of extending the credit for an additional six months, according to the Associated Press.

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