It is hard to believe, but time is running out to cash in on the American Recovery and Reinvestment Act's $8000 Tax credit for first time home buyers. Even though the program runs until December 1, 2009, if you want to take advantage of this program, you should be in the process no later than October 15th. To be sure you are eligible for the credit; you need to complete the purchase of your Chicago home by November 30, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. With HERA and more stringent loan reviews, it takes much longer to get everything finalized for closing.

Let's take a look at who qualifies for the tax credit. Under this Act, a first time homeowner is someone who has not owned a principle residence in the last three years. They will check under both spouses name for married couples to confirm that neither has owned a home within the specified time frame. First time homeowners, as defined above, can qualify for a tax credit of 10% of the purchase price of the home with a maximum credit of $8000. The home purchased can be a new home or a resale, single family, condo or townhouse.   

There are income limits as well. To receive the full tax credit, a single taxpayer's maximum income is $75,000. $150,000 is the maximum for married taxpayers who file jointly. Beyond that, the tax credit is calculated by income, up to $20,000 above the maximum. Just as an example, if a single taxpayer has an income of $95,000 they will not qualify for any of the credit. If they have an income of $85,000, then the credit amount is calculated according to that income. Your tax advisor can help you figure the actual amounts based on your income, if you are over the full credit income guidelines.

Because it now takes longer to get all your paperwork and loan documents approved through underwriting, you need to make sure you have the process started no later than October 15^th to insure you will close before the deadline! Don't delay.  Take advantage of this government gift.  Remember, that this is not a tax deduction, but a tax credit which directly reduces your federal income tax liability . If you have questions about the American Recovery and Reinvestment Act or if you are ready to start looking for homes, call Karen Breen Elia or Louis Elia at ChicagoCityHomes! These local real estate experts can help make your dream of owning your first home a reality!