First-time Buyers Of Distressed Homes Cashed In Tax Credits

First-time buyers of distressed homes across the United States have started to claim their $8,000 federal tax credit. The tax credit is part of the American Recovery and Reinvestment Act, a $787 billion economic stimulus program designed to address the growing unemployment problem in the country.

According to the Recovery Act status report of the Treasury Department, nearly 315,000 have filed an amended tax return for 2008 and claimed the federal tax credit. California has the most number of reported tax credit claimants, totaling 42,304.

First-time homebuyers who are eligible may claim the tax credit, which represents 10 percent of the total value of the property or 8,000 on either their 2008 or 2009 tax return.

According to industry experts, the Treasury Department underestimated the total number of people who took advantage of the federal tax credit because many first-time homebuyers have not made a claim on their tax returns yet.

Recent market data showed that nearly 1.1 million people who are first-time buyers have used the tax credit. Industry experts anticipated an increase in the number of first-time homebuyers to 1.8 million before the tax credit program would expire on November 30 this year.

Experts said that majority of first-time homebuyers who are eligible under the program have opted to file their claims for the credit on their 2009 returns.

Meanwhile, the Treasury report showed that states with the highest foreclosure rates have also the most number of claimed credits. Included in the top 10 states with the most number of tax credit claimed are Arizona, California, Georgia, Florida and Michigan. At the bottom of the list are Virginia and New York.

A delinquency report noted that Arizona, California, Florida and Nevada have a combined 44 percent foreclosure starts in the second quarter. Meanwhile, home price drop was biggest in the Florida metropolitan area of Cape Coral, reaching 52.8 percent to $84,000.

Following California in the lead with the highest number of tax credit claims are Texas and Florida with more than 29,000 each. Arizona had 9,300 tax credit claims while Nevada posted 5,259 claims. Last on the list is Vermont with only 351 tax credit claimants.

First-time homebuyers need only to put a claim on their tax return in order to apply for the tax credit.