Earlier this year, lawmakers passed an $8000 tax credit for first-time home buyers. As the tax credit gained popularity, first-time buyers began taking advantage of the credit which resulted in a welcomed increase in the number of home sales.
In August 2009, the National Association of Realtors (NAR) reported that for the first time in five years, real estate sales increased for four consecutive months. Home buyers are not only using the tax credit to purchase new properties, a large amount of foreclosures and distressed properties are being purchased as well.
As the November 30th deadline approaches, home builders and real estate professionals are concerned that home sales will drop. They, with the help of NAR, are urging lawmakers to extend the $8000 tax credit to give more people an opportunity to purchase homes.
Majority Leader Harry Reid, Chairman of the Senate Finance Committee Max Baucus, and other top Democrats are pushing a plan to extend the tax credit deadline for first-time home buyers from November 30, 2009 until March 31, 2010. Their plan counters a bipartisan plan that’s aiming to extend the tax credit until June 30, 2010, increase the income limitations, and offer the credit to all buyers, not just first-timers.
There is a possibility the Reid and Baucus plan will be presented to the Senate for a vote in the next few days. We will keep you posted on the tax credit extension.
Update (as of November 9, 2009):
On Friday, November 6, 2009 President Obama signed into law an extension of the $8000 tax credit. Now, first-time home buyers have until April 30, 2010 to take advantage of the extended $8000 tax credit. In addition to the extension for first-time home buyers, a tax credit of $6500 will be available for current home buyers that have been waiting patiently for the right time to purchase a larger home.
With the new law, the income limits have been increased substantially, by nearly fifty percent (50%). Married couples making less than $225,000 and single individuals making no more than $125,000 will be eligible for the new tax breaks.
You can compare the details of the initial and expanded tax credits here.
Read the NAR’s article regarding the tax credit extension to first-time and current home owners.
And, listen to NAR President Charles McMillian’s podcast announcement here.
