Did you want to use the first time home buyer tax credit but you couldn’t get it to work for you in time (it’s set to expire the end of November)? You may be in luck! Senate is considering extending the first time home buyer tax credit until Spring of next year. The current proposal would allow potential buyers to sign contracts up until April 30th and they would have to close within 60 days. The amount of the credit would still be $8,000. Income limits would also be raised from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for couples. Above that the credit starts to phase out.
But what about current home owners? They are in luck! Under the proposed bill, current home owners could be eligible for up to $6,500 for the purchase of a new home. This would have to be a primary residence and have lived in their current home five out of the last eight years.
The tentative bill may possibly be attached to a separate bill looking to extend unemployment insurance benefits (a bill likely to pass) but nothing is settled yet.
What’s interesting is this comes as the IRS is investigating apparent fraud cases involving the first time home buyer tax credit. Cases are showing up where people claimed the credit but didn’t purchase a home while other cases are showing tax claims on homes that aren’t first time homes. This adds fuel to the fire on the question of whether this tax credit stimulus is really helping. The program is costing billions and many question if the tax credit is really helping the economy.
This can turn out great for those who were already looking for a new home but buyers should be careful to run out and try to use the credit, if passed. Combined with low mortgage rates, this can be a great time to purchase a home. Remember though, a home is still a great expense and buying one shouldn’t be one that you jump into.
Here are some other takes on the credit extension:
Senators Agree to Extend First Time Homebuyer Tax Credit
First Time Home Buyer Tax Credit Could Be Extended
{ 13 comments… read them below or add one }
Seems like the same way they did with the cash for clunkers. Too bad I am no where in my life to take advantage of this but it may help stimulate the housing market having more people incentivized to buy.
I think for many who may have been close to buying this really helps to put them over. For others it’s just a nice bonus.
I’m glad it might be extended — I have a few friends who really want to buy their first homes and could really use the credit. But I’m not thrilled that they’re raising the income limits and extending it to people who already own homes. But call me cynical.
Also, it might be important to note that it’s UP TO $8,000 in tax credit or 10% of the home’s purchase price, whichever is less. Although it’s an automatic $8K in many metro areas, someone buying a home in a lower-cost-of-living areas might pick up something for under $80,000.
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That’s a good point that you aren’t necessarily getting the full $8k!
Very interesting to see that they added the category of people that have lived in their current homes 5 out of the last 8 years.
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Indeed. It should open up the market to a whole new group of people who have been looking to buy a new home. Really, only allowing new home buyers isn’t fair to those who have been looking to move.
I’m for it. We need s much stimulus as possible. Better safe than sorry.
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Thank god!! I JUST missed this stinkin’ deadline!
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I think it is a good idea to extend the tax break for those still looking to get into their first home. I think it will help stimulate, but I am not sure if it will be enough.
I am getting married in March 2010 and my fiance and I were blessed enough to be able to get in on the First Time home buyer’s credit. I hope they extend this credit for other people because it has been a huge incentive and help for us knowing that buying a house now will help us in the long-run. But, I hope they announce the decision on this soon because I know from experience, that it’s not a quick process, you definitely should think long and hard about it and plan it out.
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Buying a home is definitely not a quick process! I think that’s why you have to have the contract signed by a certain point and are given 60 days after that to close.
I think this is a great program for first timers, and for all of the stimulus and other methods to kickstart the economy this is one I agree with the most. Could have done without cash for clunkers. It’s definitely a great time to buy based on my appraisal I just received on my home I’m trying to refinance, ouch.
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It does seems to make sense as housing seems to be a huge reason for this current economic mess. Part of me is hoping it is extended to current home owners but at the same time I wouldn’t mind home prices remaining low for when we look to buy. A depressed price may be worth more to us than the stimulus!
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