Buying a home

Both houses of Congress passed the American Economic Recovery and Reinvestment Act of 2009. There were a lot of provisions in the bill that will provide funding to education, telecommunications and infrastructure. In the bill, there were also a number of tax credits. Each individual will receive a $1000 tax credit. In addition, there will be an added $2500 education tax credit. Perhaps the most interesting tax-change in the bill is an $8,000 tax credit for first-time home-buyers in 2009.

Originally, the bill had called for a $15,000 tax credit, but was scaled back to $8,000 in the finalized version of the bill. The previous first-time home-buying credit was $7,500. However, home-buyers had to pay that money back over the next several years. The new tax credit in ARRA has no repayment requirement. It's a true tax credit, not a tax deduction. In essence, buying a home during the year of 20009 will net you $8,000 in cash. Chances are you will end up getting most of this money back in the form of a tax-return during the spring of 2010.