Homebuyer tax credit to be extended, expanded

Real estate — Congress broadens program to include current homeowners; credits are available through June

  • By: David Sale  
  • Published: 11/9/2009 1:51:07 PM
   Local real estate professionals — and homebuyers — are celebrating the passage of an extension to a popular federal tax credit program.
   Since January, first-time homebuyers have been getting tax credits of up to $8,000 as part of the federal economic stimulus package. Those credits were set to expire at the end of this month, but a bill signed last week by President Barack Obama will extend the program and include second-home buyers, as well.
   Rather than having buyers rushing to close sales by the end of the month, the credit will be extended through the end of April.
   “That’s been great news, because a lot of lenders have been swamped as people try to meet the deadline,” said Newberg real estate agent Rita Wolff. “The extension will only encourage more buyers.”
   Additionally, buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. To qualify, both first-time buyers and those moving to a new home have to sign a purchase agreement by April 30 and close by June 30.
   “The first credit had a tremendous stabilizing effect on the local market,” said Stewart Brown of Valley Mortgage. “We’ve actually seen a small amount of sales growth among first-time homebuyers.”
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
   The tax credit is restricted to the purchase of a principal residence costing $800,000 or less — meaning vacation homes and rental properties are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
   “This is really going to take things to the next level, in terms of the scale and volume of sales,” Brown said. “People buying a second home are usually better prepared and have more equity.”
   “I’m not yet sure what kind of ramifications the expansion will have — but the prior version certainly stimulated sales,” Wolff said.
   The homebuyer tax credit is one of two tax breaks totaling more than $21 billion that the U.S. Senate included in a bill extending unemployment benefits. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
   “I’m already seeing people calling and asking about the program — it seems likely that after this latest round, the tax credit will be allowed to sunset, so buyers are getting ready now,” Brown said.
  Local real estate professionals — and homebuyers — are celebrating the passage of an extension to a popular federal tax credit program.
   Since January, first-time homebuyers have been getting tax credits of up to $8,000 as part of the federal economic stimulus package. Those credits were set to expire at the end of this month, but a bill signed last week by President Barack Obama will extend the program and include second-home buyers, as well.
   Rather than having buyers rushing to close sales by the end of the month, the credit will be extended through the end of April.
   “That’s been great news, because a lot of lenders have been swamped as people try to meet the deadline,” said Newberg real estate agent Rita Wolff. “The extension will only encourage more buyers.”
   Additionally, buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. To qualify, both first-time buyers and those moving to a new home have to sign a purchase agreement by April 30 and close by June 30.
   “The first credit had a tremendous stabilizing effect on the local market,” said Stewart Brown of Valley Mortgage. “We’ve actually seen a small amount of sales growth among first-time homebuyers.”
The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.
   The tax credit is restricted to the purchase of a principal residence costing $800,000 or less — meaning vacation homes and rental properties are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.
   “This is really going to take things to the next level, in terms of the scale and volume of sales,” Brown said. “People buying a second home are usually better prepared and have more equity.”
   “I’m not yet sure what kind of ramifications the expansion will have — but the prior version certainly stimulated sales,” Wolff said.
   The homebuyer tax credit is one of two tax breaks totaling more than $21 billion that the U.S. Senate included in a bill extending unemployment benefits. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
   “I’m already seeing people calling and asking about the program — it seems likely that after this latest round, the tax credit will be allowed to sunset, so buyers are getting ready now,” Brown said.
  First-time buyers already in the process of making a purchase need not worry about qualifying for the $8,000 credit if they close after the original Nov. 30 deadline.

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TrystanW from San Diego, California
11/13/2009 12:34:00 AM

Too bad, vacation homes and rental properties are ineligible. Part of the homebuyer tax credit extension was an unemployment extension. Due to the recession, many people have run out of their unemployment benefits, and Congress has generously decided to utilize an unemployment extension for workers that have lost their jobs. However, for those of you worrying about even more taxes funding it – it isn't. Instead, the extension is being covered by employer taxes, just as unemployment insurance already is. Well, unless you own a business and have to pay employees – in that case you can worry. However, for the rest of us, rest assured that the unemployment extension won't cause you to go into any further tax debt because of enhanced unemployment benefits.




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