November 9th, 2009
Fact Sheet: Home Buyers’ Tax Credit and Unemployment Benefits Extension
2 Comments |
When President Obama signed H.R.3548 – Worker, Homeownership, and Business Assistance Act of 2009, popularly known as the Home Buyer Tax Credit, he effectively extended the federal tax credit for first-time home buyers originally set to expire November 30, 2009 to April 30, 2009, and also extended unemployment benefits to bring relief to the current 10.2% of Americans looking for work. Here’s a closer look at the bill and how consumers will be benefitting from it:
HOME BUYER TAX CREDIT
- For whom?
First-time home buyers – You qualify if you have not owned a home in the last 3 years, and must purchase your new home as the principal residence.
Repeat home buyers – You have owned and lived in a home for the last 5 consecutive years at any time during the eight years before your new home purchase.
You must purchase the home or have it under contract by April 30, 2010, and close by June 30, 2010.
The first-time homebuyer tax credit applies to 10% of the purchase price up to a maximum of $8,000. The repeat homebuyer tax credit likewise applies to 10% of the purchase price up to $6,500.
- Qualifications for both tax credits
For homes purchased after Nov. 6, price of the house cannot exceed $800,000. Prior to purchasing a home before Nov. 6 under the First-Time Home Buyer tax credit, there was no price limit.
New, higher income limits for both the first-time and repeat homebuyer credit apply to homes purchased after Friday, Nov. 6, and are $125,000 to $145,000 for individuals and $225,000-$245,000 for joint filers. For homes purchased before Nov. 6, the original income limits for the first-time home buyer credit are between $75,000-$95,000 for individuals, and between $150,00-$170,000 combined income for couples or joint filers.
You must live in your newly-purchased home for at least 3 years, or 36 months, or you will have to repay the entire credit (certain exceptions for military personnel or people who pass away).
- Fraud protection
Due to the federal investigations of fraud under the first-time home buyer tax credit, taxpayers will now be required to provide documentation proving they purchased a home and taxpayers must be at least 18 years old to claim the credit.
EXTENSION ON EMERGENCY UNEMPLOYEMENT COMPENSATION
- For whom?
For workers unemployed for an extended period of time and have exhausted regular unemployment benefits that are set to expire before the end of this year.
Provides further temporary availability of certain additional emergency unemployment compensation to workers. Unemployed workers are guaranteed a maximum 14 more weeks of unemployment aid, while Congress is working to pass another law to grant an additional 6 weeks—for a totally of 20 weeks—to workers in high-unemployment states where jobless rate is above 8.5%.
Details of unemployment aid program differ state to state although there are federal guidelines; check the level of benefits and eligibility your state allows.
Instead of the usual 26 weeks of unemployment compensation, Congress has extended benefits four times due to the prolonged period of unemployment; with this most recent extension, the maximum length of time an unemployed worker can get benefits in some states to 99 weeks, or nearly 2 years.
In general to qualify, workers must meet minimum requirements for wages earned or time working during the “base period”, which is the first four out of the last five calendar quarters before your claim is filed.
You must be unemployed due to no fault of your own.
- Tax cuts for businesses
An additional provision allows businesses of all sizes, hit hard by the boom-and-bust economy of the past years, to get a reduced tax cut to prevent businesses from laying off workers or closing their doors. Businesses can extend the “net-operating-loss carryback” period from two to five years, which allows them to apply losses sustained in 2008 and 2009 against taxes on profits paid in earlier years. The homebuilding industry is expected to benefit generously from this provision by offsetting their recent losses against profits when they were benefiting from the housing boom.
- For more information on filing an unemployment claim, head to the Department of Labor.
Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.