Congress Extends, Expands Tax Credit
One of my Realtor friends was a little disappointed when he heard Congress was about to extend and expand the $8000 first-time home buyer tax credit because his buyer said, “Well now I can just take my time.” Ouch for the agent, but for the buyer - I don’t blame him. He can take some time now - about seven months more to be precise.
According to CNN, the measure that has passed both the Senate and House extends the $8000 tax credit for first-time buyers - or those who haven’t owned a home in the past three years. In addition, the measure was expanded so that current homeowners can take advantage of a $6500 tax credit if they’ve lived in a home for at least five years.
That measure would apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years. The credit would be available only for the purchase of principal residences priced at $800,000 or less.
Given that enticing morsel, NOW is the time for owners who are on the fence to sell. You may take a loss - or at least not make as much as you would have three years ago - but the $6500 tax credit should take some of that sting away.
As a Realtor, I obviously see many “pros” on this bill. While I haven’t personally seen the surge in first-time homebuyers for the measure that would’ve ended on November 30th (most of my clients have been sellers), I can see where the expansion will be a huge help.
On the “con” side - takes away from the government coffers in a time when the nation is already facing a lot of debt. Also, what about buyers who just missed the deadline and bought in 2008? They still have to pay back the $5000 tax credit they received. What about buyers who sold their home a year ago? It takes away their eligibility because they haven’t owned for five straight years.
All in all, though, I’m a supporter of the measure. I just hope it will have the positive effect on the economy that it’s anticipated having.
Photo from Mortgage Rates & Trends: Mortgage Blog from Total Mortgage.
