First-time home buyer tax credit extension approved
November 5, 11:59 AMReal Estate News ExaminerBroderick Perkins
The first-time home buyer tax credit extension and expansion has won Congressional approval and is on its way to President Barack Obama.
He's expected to sign the measure as early as tomorrow.
The U.S. House of Representatives, this morning, voted 403 to 12 to pass the measure, following unanimous U.S. Senate approval yesterday.
The measure was passed as part of unemployment benefits extension legislation H.R. 3548.
The extension and expansion of the popular first-time home buyers tax credit gives both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.
The new tax credit extends the existing credit for first-time homebuyers, worth up to $8,000, and offers a new credit of up to $6,500 for some existing homeowners.
The reduced credit for existing homeowners is available to those who have been in their current residence for a consecutive five-year period.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price is $800,000.
A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010.
Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
That's all good news for the housing market.
The National Association of Realtors says as many as 400,000 resale transactions (1.2 million for both new and resale homes) were completed specifically because of the first-time home buyer tax credit, since it began, and that put a dent in the housing inventory.
Home sales also add property and sales tax revenues to the coffers of local governments as reduced inventory helps boost prices and home values.
Fortunately, the tax credit also has been available at a time when often have been below 5 percent.
Fortunately, the first-time home buyer tax credit's availability has coincided with mortgage rates often hanging below 5 percent, according to Jeff Howard, CEO of Erate.com.
As the Nov. 30 tax credit deadline neared, reports from the Commerce Department, revealed new home sales slipped 3.6 percent in September and were down 7.8 percent from September 2008.