Most believe the tax credit not only has contributed to the stimulation of the housing market, but has also stimulated the economy and created new jobs across the country. The extension and expansion of the tax credit permits additional individuals and families to become homeowners.

The extension allows first time homebuyers to take advantage of up to an $8,000 tax credit through April 30, 2010. The expansion part of the bill allows current homeowners to take advantage of up to a $6,500 tax credit through April 30. Current homeowners must have lived in the home being sold or have sold their primary residence within five consecutive years of the past eight years. Any homeowners with a pending contract have until July 1 to close the transaction.

The income limits were also increased. Singles income limitations increased to $125,000 and couples income limitations increased to $225,000. The maximum purchase price of the home allowed under the tax credit is $800,000.

When you think about it, builders, plumbers, appliance stores, electricians and painters are but a few of the small, medium and large sized businesses across the country also affected by the downturn in the housing industry. In his appeal to the House Committee on Small Business, Charles McMillan stated that if we can stabilize the real estate industry in the country, we can stabilize small businesses around the country too.

His appeal contributed to some of the corrective measures starting to roll out such as increasing the first-time homebuyer credit to $8,000 and extending the credit deadline to December 2009. Additional 2009 stimulus incentives are also in the works. Already, these tactics have proven effective in helping many small businesses, including realtors, get their businesses back on track and it has also worked as a stimulant to the economy.

While it will take more than the first-time homebuyer tax credit and other stimulus programs to return the economy to normal, every little bit helps to make the economic ground less shaky and more stable.

The new homebuyer tax credit is different than the homebuyer tax credits that have existed in the past. This time it is $8,000 instead of $7,500 and first time homebuyers do not have to pay it back. In the past, it was more or less like a loan, which meant that first time homebuyers had to pay it back in due time. This didn’t serve as much of an incentive for the fact that these first time homebuyers would have their new house payment, their regular bills, and this “tax credit loan” that they had to pay back.

First of all, you have to buy your first home between January 1, 2009 and December 1, 2009 to get this tax credit. However, it is important to note that not everyone gets the entire $8,000 unless the $8,000 is at least 10% of the home’s purchase price. There are also income restrictions. A single taxpayer can have an income up to $75,000 and a married couple can have an income of up to $150,000.

Another interesting fact about the new homebuyer tax credit is that you can claim the tax credit on your 2008 tax return if you bought your home in early 2009. If you already filed your return, all you have to do is file an amended return that reflects the purchase so that you can get your tax credit. You do not have to wait until you file your 2009 taxes to get your tax credit. When you amend your return, all you have to do is file an IRS Form 5405 to determine the credit amount and reflect this on line 69 of your 1040.

Homeowners who are building homes can also qualify for the tax credit as long as the home is occupied between January 1, 2009 and December 1, 2009.

As for the benefits that you can expect, they are rather substantial. You do not have to pay the money back and you can do whatever you wish with it. You can pay your new mortgage payment, pay off other expenses, or use that money to furnish your new home. You are also stimulating the economy.