The First Time Home Buyer Tax has been extended and expanded. So much so that calling it by that name is only half the story.

As an amendment to an unemployment insurance bill, a RPAC endorsed extension and expansion of the current home buyer tax credit unanimously passed the Senate late Wednesday and the House of Representatives on Thursday. President Obama signed the bill on Friday.

To summarize the new bill, first-time home buyers will still be able to claim the $8000 tax credit until April 30, 2010. In addition, closing the sale isn't required prior to the deadline. This credit would apply if a binding contract is in place by April 30, 2010; buyers have an additional 60 days to close the sale.

In addition, current homeowners who have maintained the home they want to sell as their primary residence for five of the last eight years are also eligible. In those cases, the maximum credit is lower: $6,500 or 10 percent of the sale price, whichever is least.

The previous credit included income caps of $75,000 and $150,000 for individuals and couples. The new bill lifts those caps to $150,000 and $225,000 for individuals and couples, respectively. The new version does, however, cap the purchase price of homes purchased; the credit may not be claimed when the purchase price is $800,000 or greater.

There are several other minor changes to the current credit through this legislation. You can see a side-by-side comparison of the two bills by clicking here.

Extending/Expanding the Home Buyer Tax Credit

Senate leaders from both parties have agreed to extend and expand the First Time Home Buyer Tax Credit that is set to expire at the end of November. Unfortunately, an agreement doesn't count as a vote. The hold up? Senate procedures and a legislative vehicle.

The agreement is currently in the form of an amendment to an Unemployment Insurance bill.

The Senate is expected to vote this evening for a "Motion to Invoke Cloture." If 60 Senators vote yes on the cloture motion, the Senate will then be able to schedule a vote on the bill that contains the amendment. Once the Senate acts, the tax credit must still go to the House of Representatives for action. 

If passed by both houses of Congress unchanged, the amendment would:

EXTEND:

- The current credit until April 30, 2010. However, this deadline would apply for sales contracts; closings would have to be finalized by June 30th. Senator Johnny Isakson (GA-R), sponsor of the amendment, is quoted as saying "The American people should understand this -- and the affected industries -- this is the last extension. Tax credits like this only work by creating the sense of urgency to take advantage of them."

EXPAND:

-The amendment offers an additional tax credit of $6,500 to any home buyer who has lived in their current home for at least 5 years.

-The current agreement also expands the current income limits from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for couples. However, homes being purchased for more than $800,000 would not be eligible for the credit.

OTHER DIFFERENCES:

-Homes being purchased for more than $800,000 would not be eligible for the credit.

-Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.

-To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit. Claimants must also be 18 years old.

The credit is estimated to cost $10.2 billion, but Senate Banking Committee Chairman Chris Dodd said that the plan's price tag would be off-set by delaying a tax break for multi-national companies scheduled to take place next year.

As with any piece of legislation, all of this could change at any minute. Once passed by the Senate, it could change or die in the House of Representatives. The Obama Administration has endorsed the current amendment.