First-time homebuyers can expect a big tax credit this year, thanks to President Barack Obama's stimulus package signed into law Feb. 17.
Under the American Recovery and Reinvestment Act, single first-time homeowners with an adjust gross income of $75,000 or less, will receive an $8,000 credit on their next income tax return.
For those filing a joint return, the maximum income goes up to $150,000.
In July 2008, the Bush administration passed a similar tax credit to help stimulate the housing market, and encourage more people to buy homes. The Bush tax credit gave first-time homebuyers the option of receiving a $7,500 interest-free loan that had to be repaid within 15 years.
Unlike the first-time homebuyer tax-credit created under Bush's leadership, Obama's $8,000 credit is free money for homebuyers. It is not a loan but a gift.
"I like that the $7,500 loan that Bush implemented is now an $8,000 grant," said Fort Worth Real Estate Broker Dustin Collett.
Under the law, banks are also receiving finacial incentives for loaning money to homebuyers.
Obama's tax-credit applies to all first-time buyers who purchase a home in 2009.