Have you been waiting for the opportune time to move out of a rental and into a home? If so, there may be no time like the present.

Among the many items included in the Economic Stimulus Bill signed by President Obama on February 17, 2009 is an expansion of the tax credit for home buyers. Sometimes referred to as the "first time home buyer's credit," it's actually available to any purchaser who has not owned a principal residence for the immediately preceding three years. The new version of the credit has been made significantly more valuable.

For homes purchased by November 30, 2009, the credit is 10% of the purchase price up to $8,000 up from $7,500 in 2008. More important than the increase in the amount of the credit is the fact that, unlike the tax credit enacted in 2008, the new credit does not have to be repaid. The credit for homes purchased in 2009 serves as a permanent credit repayable only if the home ceases to be the taxpayer's primary residence within three years. If the house is sold within three years of the original purchase date, the repayment is limited to the amount of any gain generated from the sale. Repayment of the entire credit is required if the home is converted to business or rental use. Also repayment is required if the home is sold via condemnation, threat of condemnation or destroyed. However, if the house is destroyed or condemned, the repayment requirement is eliminated if a new principal residence is purchased within two years.

In addition, the credit for homes purchased in 2009 can be claimed on either the 2009 tax return or on the 2008 return, originally due April 15, 2009. By claiming the credit on a 2008 tax return, taxpayers who purchase a home in 2009 are given a dual benefit. They are able to claim a credit for a transaction that occurred after the end of the 2008 tax year, and they can get access to the money without waiting to file a 2009 tax return; even faster if they file electronically and request direct deposit of their refund.

Of course, there are limitations to who may qualify for the benefit. The full credit is available for married taxpayers with modified adjusted gross income (MAGI) under $150,000.00 or single taxpayers or heads of household and married taxpayers filing separately with income less than $75,000.00. The credit is reduced by 5% for each $1,000.00 of MAGI above the incomes limits listed above. The credit is claimed by filing Form 5405 with the tax return for the year in which the qualifying purchase is reported. Married taxpayers qualify for the "first time" buyer's credit if neither of the taxpayers has owned a principal residence during the preceding three year period ending on the date of purchase.

The "first time" home buyer credit is in addition to all the traditional benefits home ownership offers, including tax deductions for mortgage interest and real estate taxes, and appreciation over the long term. Even in the current environment when financial market extravagances make some folks a little gun shy, home ownership can still be one of your most favorable tax benefits.

Matthew P. Deutsch, Principal of The Deutsch Group is a Certified Public Accountant located at 7502 West Madison in Forest Park. At The Deutsch Group, we would be happy to assist in evaluating the tax benefits of home ownership in your particular situation or to assist with your other accounting, tax planning or business management needs. You can contact The Deutsch Group at 708-218-4385.