For the last few weeks, First Time Homebuyers and Real Estate Practitioners have been holding their breath.  Crossing their fingers.

Will the $8,000 Federal Income Tax Credit, enacted earlier this year by the Barack Obama Administration, and set to expire at the end of November, be extended?  Perhaps extended to existing homeowners as well?

This year, our Chicago Real Estate Team has closed 13 transactions in which at least one party has taken advantage of the credit.  Would these folks have purchased if their were no credit?  Can't know for sure - but, at minimum, this sizable stipend factored into their home buying decision.

Over the last couple of weeks, as the window for finding a home, finalizing a contract on it, and completing the closing has been less likely, a few of the first-time buyers we are working with have seemed almost resigned to missing the credit, and have delayed their new home or condo searches.   There's been a bit in a lag in our business as a result.

Under a proposal in the U.S. Senate, however, as reported in today's Wall Street Journal by reporters Corey Boles and John D. McKinnon,  the First Time Buyer Credit would not only be extended.  It would be expanded as well - to current homeowners who have lived in their homes at least five out of the last eight years.

Still in negotiation by lawmakers, the proposal would extend the first-time buyer credit, beginning immediately after the current November 30th program expiration, to April 30, 2010.  To receive an $8,000 tax credit, first-time buyers must have an accepted contract before that date.  The closing must take place before July 1, 2010.

In addition, current homeowners who have lived in their current residence for at least 5 of the last 8 years would be eligible for a reduced $6.500 tax credit, under the same time limitations. 

Income limits to qualify for the credit would be increased to $125,000 for a single taxpayer, $250,000 for a couple filing jointly - up from the current $75,000 and $150,000 income caps.  For those earning more, the credit would quickly phase out.

Many in real estate attribute the First Time Buyer Credit with boosting real estate sales in a sluggish market.  The new proposal would allow more buyers to benefit, without creating a boondoggle for flippers or real estate investors.

Although support for the extension and expansion proposal has met with approval by many in the Senate - Democrats and Republicans alike - a few are concerned about the its cost.  Approval is far from certain at this point - but the fact that both extension and expansion of the current is under serious discussion is quite encouraging.

See our post today via BlogChicagoHomes.com.

DEAN & DEAN'S TEAM CHICAGO