As seen in Business North Carolina, Law Journal May 2009

By Gene Chianelli
Manning Fulton & Skinner, P.A.

When President Obama signed the American Recovery and Reinvestment Act of 2009 into law Feb. 17, it created considerable tax benefits for businesses. These benefits may save businesses more than $75 billion in 2009 and 2010 alone. In general, they fall into two categories — changes to business income and deductions rules and new or expanded business-related tax credits and other incentives.

First-time homebuyer credit. In 2008, a tax credit was created for first-time homebuyers — $7,500 or 10% of the purchase price, whichever was larger. The credit is available to taxpayers who purchase a principal residence between April 8, 2008, and July 1, 2009, and who did not have an ownership interest in a principal residence in the prior three years. Though styled as a credit, it was more properly regarded as a loan since homebuyers were required to repay the credit over 15 years beginning in the second year after purchase. Under the act, the maximum credit increases to $8,000, and the requirement to repay it is eliminated unless the taxpayer sells the home within three years. While the credit is only available to individuals, it also is meant to stimulate housing-related industries such as construction and development.

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