First-Time Homebuyer Credit – EXTENDED!

Last Friday, Nov. 6, 2009, President Obama signed into law the Worker, Homeownership and Business Assistance Act of 2009. This extended the deadline to take advantage of the first-time homebuyer credit—to April 30, 2010! Under the previous Act, homebuyers had to close on their home before December 1, 2009 to be eligible for the $8,000 tax credit.

Initially, the first-time homebuyer credit was what motivated us to start making our dream home a reality. We were at the appropriate age and point in our lives where buying our first home was feasible. Plus—who could pass up $8,000? (Unlike previous years, this tax credit does not have to be repaid!)

At the beginning of this past year, we started taking steps to make it happen, namely driving through areas of the state we found appealing and stopping at lots that were for sale. We also signed on with a realtor to help us search for land. Around the same time, we met with our architect for the first time. Even though we requested our house plans to be finished on an accelerated timeline (which ended up being four months start to finish), we started sweating the Nov. 30 deadline. We still needed to research, meet with and get quotes from builders, and visit banks that had the best construction loan rates. Mind you, these sources were in New Hampshire. And we weren’t.

It was late September before we chose our builder. We knew the Nov. 30 deadline wasn’t feasible and were given a March 1st end date. We chose to look at this “setback” positively. We’d be able to save more money before our house was built.

Needless to say, we are beyond thrilled with this new law. We’ll be able to both continue saving money and take advantage of the tax credit—the same credit that encouraged us to stop dreaming and start building!

P.S. In case you were wondering, new construction homes are eligible for the tax credit, just as if you bought any other home. From the IRS:

Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be on or after January 1, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April, 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date.