There has been a lot of debate of the First Time Home Buyer Tax credit in the last several months, intensifying as the original November 30 deadline approached. Today, President Barack Obama signed into law bill H. R. 3548, granting an extension of the credit until April 30, 2010. The measure passed with an unprecedented show of bi-partisanship with a vote of 403-12 in the house and the Senate approving it unanimously.

First Time Home Buyer Tax Credit Changes

The bill made some changes to the original tax credit, aside from extending the deadline to April 30, 2010 to claim it. However, you have until June 30, 2010 to close on a property and still be able to claim the credit. So, say you put in an offer on a home towards the end of April next year. The offer is accepted and you open escrow on the 28th. As long as you close escrow before June 30, you can still claim the credit (of course, you have to meet the other requirements as well).

Credit Extended to Current Home Owners

Another significant change to the original credit is the addition of a smaller credit of $6,500 for current home owners if they purchase a new primary residence. There are of course, some requirements. In order to qualify for the credit, existing home owners must have lived in their primary residence for the last consecutive five years of out eight. The new home purchased can't exceed more than $800,000. You must also meet the new income requirements (see below) and just like first time home buyers, you must live in the new home for at least three years. Otherwise, you will be forced to repay the credit.

Income Limits

The other major change to the tax credit is the raising of the income limits. Under the original tax credit, a single person could earn no more than $75,000 a year and married couples $150,000. Now the income eligibility limits for both groups of home buyers have been raised to $125,000 a year for singles and $225,000 for married couples.

Military Personnel

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

The bill H. R. 3548 also extended unemployment benefits for another 14 weeks for those out of work people who have exhausted their benefits. It also provides additional tax relief for small businesses.

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Source: Associated Press