Baltimore real estate sales have already benefited from the $8,000 first-time home buyer tax credit that was part of the big economic-stimulus package that President Obama signed in February. Now home buying will become easier financially for even more first-time home buyers, as well as for current homeowners and higher-income buyers.

On November 6, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009. It extends the deadline for claiming the credit beyond the current deadline of Nov. 30, 2009, to May 1, 2010.

For first-time home buyers — buyers who haven’t owned principal residences for three years before making the purchase — the tax credit is equivalent to 10 percent of the purchase price of a home, but with a cap of $8,000. Home buyers must have a signed sales contract before May 1, 2010, but they have until the end of June 2010 to actually close the transaction. The original credit applied to those who bought a home on or after Jan. 1 and before Dec. 1, 2009.

Even better, the new law raises the annual income limits to $125,000 from $75,000 for singles and to $225,000 from $150,000 for married couples. With those income limits, it’s hard to imagine any first-time home buyer who would not be eligible for the credit.

That’s the good news. The really great news — at least to this Baltimore Realtor® — is that current homeowners are now eligible for a tax credit of up to $6,500. To claim their credit, current owners must buy a primary residence after living in their current home for five consecutive years over the previous eight years. They can claim the credit on homes purchased between Nov. 7, 2009, and the end of April 2010, which means they need a signed sales contract before May 1, 2010, but they have until the end of June 2010 to close the sale. The income limits for current homeowners are the same as those for first-time home buyers.

Both current homeowners and first-time buyers, the tax-credit program applies only to primary residences purchased for less than $800,000. Buyers who use their new property as their primary residence for three or more years after the purchase won’t have to pay back the credit. And buyers can claim the credit on their 2009 taxes, even if they bought their new home in 2010. They just have to file an amended return.

Home buyers and Realtors should note that the new law requires documentation — such as a copy of the buyers’ HUD-1 Settlement Statement — to prove that the sale has closed. In addition, it also bans anyone younger than 18 years old from claiming the credit (one article I read said a 4-year-old claimed the tax credit under the original program).

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