Actually, I may have spoken too soon on the Democrats killing the $15,000 tax credit for first-time home buyers. Although it surely would have provided incentive to help remove the oversupply of homes for sale and foreclosures in some areas, at least they managed to sweeten the existing tax credit.
For starters, the tax credit doesn't have to be repaid back to the government as long as you stay in your new home for three years. Also, the maximum credit ceiling has been increased to $8,000 from $7,500. And, it really will put more after-tax money in your pocket. Big time! Check out the example below.
For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed). That's a pretty sweet incentive.