First-time buyer tax credit included in stimulus

01.30.09
By Sarah Beldo

Are you debating whether or not to purchase a home this year? If so, a new tax credit written into the proposed economic stimulus package could offer a big incentive.

The stimulus - which has already passed in the House of Representatives and is set to be considered by the Senate next week - includes a $7,500 tax credit for first-time buyers, CNN Money reports.

To qualify, you need to be buying a property for a primary residence. Also, you cannot have owned a house for the past three years.

Individuals who make more than $75,000 will receive a lower-value tax credit, while those earning above $95,000 are ineligible. For couples, the thresholds are $150,000 and $170,000.

Both the government and the housing industry hope that if it is passed, the stimulus could prompt wary would-be buyers to take the leap into the market.

"Our economists have studied the effect and they say there could be a 10 percent increase in home sales if it's implemented," the National Association of Realtor's Mary Trupo told the news provider.

Meanwhile, the housing market continues to show considerable weakness, with U.S. Census Bureau data revealing that new home sales dropped by 14.7 percent between November and December.

New home sales for the last month of 2008 were nearly 45 percent lower than those seen during the same period one year earlier.

Existing home sales fared slightly better. National Association of Realtors data released earlier this week shows an increase of 6.5 percent between November and December. Foreclosures made up a large percentage of these sales.

However, total sales for 2008 declined more than 13 percent, compared with 2007.

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First-time buyers could get a $7,500 tax credit