Congress Approves Tax Credit

Congress has approved an $8,000 tax credit for fist time buyers. We were disappointed to see congress reduce the $15,000 tax credit for all home buyers to $8,000 for first time buyers. This is still an improvement from the current $7,500 tax credit currently offered because it does not need to be repaid as long as the buyer stays in the home for at least 3 years.

Here is an update from the National Association of Realtors:

Stimulus Advances With Tax Credit Changes

The $790 billion stimulus package hammered out by House and Senate conferees late yesterday increases the home buyer tax credit to $8,000, from $7,500, and drops the repayment feature for buyers who hold on to their property for at least three years.

The NATIONAL ASSOCIATION OF REALTORS ® has sought removal of the repayment requirement because it discourages buyers from taking advantage of the tax credit. The three-year minimum holding period is a safeguard against speculators' use of the credit.

The legislation also extends the effective date of the credit to December 1 from June 30, and extends eligibility to borrowers who buy their home with the help of state or local financial assistance that comes from the proceeds of tax-exempt mortgage revenue bonds.

The credit remains open only to first-time buyers (those who haven't owned in at least three years) and some income eligibility restrictions apply, but those are unchanged from the existing program.