US Treasury Touts Homebuyer Tax Credit

by Leroy Baker, Tax-News.com, New York

27 February 2009

In an ongoing effort to deliver on swift implementation of the Obama Administration's economic recovery plans, the US Department of the Treasury has publicized the availability of an expanded tax break for first-time homebuyers.

The provision, included in the American Recovery and Reinvestment Act of 2009, will make up to USD8,000 available now to qualifying taxpayers who buy homes this year.

First-time home buyers represent a significant portion of existing single-family home sales. According to the Treasury, in 2008 nearly one out of every two homebuyers were buying for the first time. It is expected that the expansion in the first-time homebuyer credit will make it easier for first-time home buyers to enter the housing market this year.

"The expansion of the first-time home buyer tax break as part of the President's recovery agenda gives money to taxpayers when they need it most, while also targeting an important group of buyers," said Treasury Secretary Tim Geithner.

"We view our economic recovery plan, our financial stability plan and now this homeowner affordability plan as three legs of the same stool – an integrated whole that represents our immediate response to the current crisis. We remain committed to swift, efficient and effective implementation of all of these components," he added.

The announcement comes on the heels of the first Recovery Plan Implementation meeting led by Vice President Joe Biden at the White House on February 25; Secretary Geithner was among several cabinet secretaries to attend and offer updates on implementation efforts in progress at Treasury and its bureaus. Vice President Biden is overseeing the Administration's implementation of the Recovery Act's provisions.

Under the new law, qualifying taxpayers who buy a home this year before December 1 can claim up to USD8,000, or USD4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns. Unlike the prior first-time homebuyer credit, this is money individuals do not need to pay back.

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