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Federal Home Buyer Tax Credit Update

This post was written by jd on June 23, 2009
Posted Under: Real Estate

tax-credit-update
Lawmakers and businesses are calling for an expansion of the existing tax credit now capped at $8,000 to be raised to $15,000. The existing federal tax credit of $8,000 has been a success in spurring first-time home buyers to get back into the housing market.

A further proposed change would be that the tax credit would be applied to anyone who buys a home.

First-time buyers make up a hefty 40% of home purchases, according to the National Association of Realtors (NAR), which is about 5 percentage points higher than the historical average.

Some economists say a tax benefit is vital to spur home buying and help stabilize prices.

According to USA Today the current proposals are:

“•A Senate bill to expand the tax credit to $15,000 for any home buyer regardless of income was introduced this month by Sen. Johnny Isakson, R-Ga. It is co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn.

“It would go a long way toward inducing trade-up buyers into the market,” says Lawrence Yun, chief economist at the NAR.

•A House bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance.

•Another bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.”

The present tax credit does not apply to singles earning more than $95,000 a year and couples who earn more than $170,000.

Buyers do not have to repay the tax credit if they occupy the home for three years or more.

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