Saturday 15th of August 2020

Related Articles

House Extends Tax Credit for Homebuyers

The House of Representatives voted to extend the very popular $8,000 homebuyer tax credit that was set to expire soon. The extension will allow homebuyers to qualify for the credit through April 2010. The House also expanded the program to provide $6,500 to buyers who have owned their current homes for a minimum of five years.

Real estate agents and experts believe the bill, which President Obama signed into law last Friday, will make it less challenging for current homeowners to get back in the housing market. The bill also extends unemployment benefits and provides a tax break to businesses losing money.

“They’re calling it the move-up credit,” explained Rachel Hultin, a real estate broker with Urban Niche Realty, of the tax credit for homebuyers. “But it will allow people to sell homes and do a lateral or buy-down move. If they had to bring money to a closing and that $6,500 wasn’t on the table, they might not be able to do it.”

The federal government has provided first-time homebuyers with $8,000 tax incentive since January of this year as part of the stimulus package promoted by President Obama. It was slated to expire at the end of November.

The program’s extension requires move-up and first-time homebuyers to sign home purchase agreements by April 30, 2010 and close on the property by June 30, 2010 in order to qualify for the tax credits.

They apply only to principal homes that cost $800,000 or less, which makes vacation homes ineligible. Individuals with annual incomes of more than $125,000 and joint filers with household incomes of more than $225,000 are not eligible for the tax credits.

For members of the military who have served outside of the U.S. for at least 90 days, the incentive is extended another year, until June 30, 2011.

“I have (first-time buyer) clients who did not get it together fast enough to close by Nov. 30, so I’ll have a number of happy clients,” commented Liana Pomeroy, a certified mortgage planner with Cherry Creek Mortgage. “Many of my clients just haven’t found what they want, and some people need to do some credit repair or save some more money.”

The extension of the homebuyer incentive is expected to cost the federal government about $10.8 billion in tax revenues.

“We have seen a very positive impact from the $8,000 first-time-buyer incentive and are hopeful this new tax credit will bring the same results,” noted Dee Chirafisi of Kentwood City Properties. “In today’s market, it is always helpful to have an incentive for buyers and a timeline that helps to create a sense of urgency and a reason to buy now.”