The Votes are In - First Time Homebuyer Tax Credit Extended and Expanded!

In what feels like great relief after a hard fought battle, the House of Representatives voted almost unanimously this morning (403-12) to extend the existing first time homebuyer tax credit.  Here are some of the details: "The new tax credit extends the existing credit for first-time homebuyers, worth up to $8,000, and offers a new credit of up to $6,500 for some existing homeowners.

The reduced credit for existing homeowners is available to those who have been in their current residence for a consecutive five-year period.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.

The maximum allowed home purchase price is $800,000.

A home buyer must have a sale agreement in hand by April 30 and close escrow by June 30, 2010."  Excerpted from this article.

President Obama is expected to sign the legislation as early as tomorrow (Friday, November 6th).  In a memorandum I received from the National Association of Home Builders (NAHB) this morning, comments regarding the finality of this extension were reviewed:

Even as Congress neared completion on the legislation, proponents made it perfectly clear that the home buyer tax credit would not be extended when it expires next year. Sen. Johnny Isakson (R-Ga.), a long-time champion of the home buyer tax credit, said: "This is the last extension of the home buyer tax credit. Tax credits like this only work by creating the sense of urgency to take advantage of it, and to bring the market back."

On the floor of the Senate, Finance Committee Chairman Max Baucus (D-Mont.) said that, “It’s important that this tax credit does not become a permanent fixture in the tax code. Our amendment would end the credit on April 30 of next year. This extension would get us through the winter – traditionally the worst season for real estate. Our amendment would jump-start the housing market as it enters the summer months of 2010.” Baucus added that the seven-month extension of the tax credit would be “long enough to encourage home buyers to buy homes, but it’s short enough to remain fiscally responsible.”

All in all, it's great news, especially for those who had hopes of taking advantage of the tax credit but simply could not make the deadline!  Also, current homeowners who were previously excluded from the credit will now be able to take advantage as well, if they meet the criteria.  While criticism of this credit and it's extension abound, within both the political and real estate worlds, there is no doubt that each taxpayer that is able to claim the credit will certainly benefit.  Long term, will it help boost our real estate market, and on a grander scale, our economy?  Only time will tell.

More on this topic coming - please contact me if you have any questions about the credit and how it may help you move towards your goals!

UPDATE: This morning, November 6th, 2009, President Obama signed into law legislation that officially extends and expands the tax credit - among other things.  For more details, visit here.