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The New and Improved Home Buyer Tax Credit

Real Estate Agent with The Buyers' Counsel

November 05, 2009 01:59 PM

The much-anticipated extension to the home buyer tax credit has finally been approved. The Senate's vote yesterday resulted in a 98-0 win and today it was passed in the house. The bill now moves to the President's desk for a final signature.

First-time home buyers have been eligible for tax credits of up to $8,000 since last January as part of this year's economic stimulus package. The newly backed program will expand the credit to include existing home owners.

Under the revised program, those who have owned a home for at least five years will be able to apply for tax credits of up to $6,500 when they purchase their next home. To qualify, buyers will have to sign a purchase agreement by April 30, 2010 and close by June 30.

The maximum purchase price on a home will be $800,000 with vacation homes not eligible. Income limitations are $125,000 for single tax payers and $225,000 for joint filers.

The National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) have been lobbying hard for the extension and expansion of the tax credit. NAR claims that so far, about 1.4 million first-time homebuyers have qualified for the program and they estimated that 350,000 of these buyers would not have otherwise purchased.

The tax credit is also set to be extended for another year for military personnel serving outside of the United States until June 30, 2011.

Senator Johnny Isakson, who heavily pushed for the extension, along with his own version that would have increased the credit to $15,000 stated, "This is probably the last extension."

But, is this really true? When April 2010 comes around and the housing market is still not in full recovery mode, will the politicians be able to let this go and actually come to an end, or could it possibly become a more permanent subsidy?

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DeeDee Riley

Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA

Realtor - El Dorado Hills & the Surrounding Areas

Official word is that President Obama has signed it. It is finally a done deal.

Thanks Claudette!

Nov 06, 2009 07:12 AM

Anonymous

Patti Geib

Claudette, thank you for news, but it's not good news. Does any person have any concern about the cost of selling only 350,000 more homes than without the tax credit. It costs us, the taxpayer, $64,000 for every $8,000 tax credit used. Please do the math, we simply can't afford it. Government doesn't worry about how they will pay for it, they can raise taxes or print money. Why is it if we print money it's called counterfeitting and when the government does, it's OK?

Furthermore Fannie Mae just posted a $18.8Billion dollar loss in the 3rd quarter and now has close to $200 Billion dollars in non performing assets. Just another government debacle. Oh did you know the Federal Housing Finance Authority has cleared Fannie Mae to sell $2.6 Billion in low income housing credits to "undisclosed" third party investors believed to include Goldman Sachs & Berkshire Hathaway - but at what cost to the taxpayer?

Sorry I think we need to get some control of the industry, with government in charge it's being destroyed. NO more giveaway programs, we simply can't afford them. I don't care what the perception seems to be, it's a short term reprieve from total economic disaster.

Nov 06, 2009 07:28 AM

#107

Anonymous

IRja Kujala

I choose to be shortsighted and excited of the excellent opportunity this provides to the home buyers, first time or not! And this could keep us agents busy through the winter.

Nov 06, 2009 08:26 AM

#108

Jim Hale

ACTIONAGENTS.NET - Eugene, OR

Eugene Oregon's Best Home Search Website

The tax credit will be good. I haven't changed my mind. Lately.

But it will be hard to sort out. For example:

I have both ends of a certain sale. The buyer was clearly motivated by the credit. We were going to close by Nov 30 so he could get the $8000.

Then we heard the new $6500 credit was imminent. We moved the date into early December. Score dollars for both buyer and seller when the seller closes on their purchase in December.

Now we know we didn't have to do that. The $6500 credit took effect the minute Obama signed it today.

So my seller/buyer is under contract on their new home - closing in December.

Today, the sellers of that house want into the act. They bought their personal residence on January 24, 2005.

Guess when they now want to close my seller's purchase of their home.

Nov 06, 2009 10:33 AM

Nicholas Caron

Caron's Gateway Real Estate - Derry, NH

Claudette,

This is bittersweet for Realtors. It helps generate business and helps us to assist buyers and sellers. But there is also a price to pay and we must consider when the bill comes in. I think it has the potential to be a good deal for all. Thanks for the information

Nov 06, 2009 11:20 AM

Eugene Adan

Adan Properties, Carlsbad, CA (760) 720-9710 - Carlsbad, CA

Carlsbad Real Estate

Claudette,

Is the government extending this credit because they can't think of any other way to stimulate the economy? Now, they've added buyer's who have owned for at least the last five years, of course with certain conditions. Have we already forgotten the "Cash for Clunkers" auto stimulus plan. How is that industry doing?

Yeah, I guess we'll wait and see.

Nov 06, 2009 11:44 AM

Wayne B. Pruner

Oregon First - Tigard, OR

Tigard Oregon Homes for Sale, Realtor, GRI

This is good news for the real estate industry, atleast for the next 6 months!

Nov 06, 2009 01:34 PM

Jirius Isaac

Isaac Real Estate &TriStar Mortgage - Kenmore, WA

Real Estate & loans in Kenmore, WA

I saw the writing on the wall, but it sure is gonna cost us in the future!

Nov 06, 2009 04:01 PM

Cheryl Ritchie

RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD

Southern Maryland 301-980-7566

Very concise and well written. Hip, Hip, Hooray for the extension.

Nov 06, 2009 09:40 PM

Bill Gassett

RE/MAX Executive Realty - Hopkinton, MA

Metrowest Massachusetts Real Estate

This was certainly welcoming news. Hopefully the additional $6500 incentive will encourage some other folks who may have been on the fence think about jumping in and buying.

Nov 07, 2009 10:43 PM

Javier Olmedo

Keller Williams Coral Gables - Miami, FL

I can tell you that in this market (locally - Miami) it has definitely had an impact.

Nov 07, 2009 10:47 PM

Denver Johnson

West USA Realty, Mesa AZ - Gilbert, AZ

Larry (#5)-- you wrote

"As the world turns, I just hope this is a bridge to good times for us all but why $6,500 and not $3,000? I dont get it."

Can you make a case for us for why the figure should be $3000 vs $6500-- or vs $8000 like the first-time buyers?

I gather the goal of the legislation is to stimulate the sale of the current glut of repo homes, not to provide a windfall for the buyers-- so how do you arrive at a figure to do that?

Nov 08, 2009 01:16 AM

Russel Ray, San Diego Business & Marketing Consultant & Photographer

Russel Ray - San Diego State University, CA

I was extremely happy to see the extension and the new benefits.

I got a kick out of Jon's comment (#8): "Let us all remember that the government does not make money." Governments do, indeed, make money. All governments have the privilege of printing money for their citizens, including our Government.

Nov 08, 2009 01:45 PM

Anonymous

jerry dragoon - broker / realtor

hi, it's a good thing that the extension passed. i have a customer that had it not passed the customer wouldn't have been able to close on time and therefore we would have lost a sale. With all the short sales out there it takes a long time for the banks to come back with an answer so the extension does help. Buyers that are on the fence, well, that's why we're salespeople. we should be able to bring them to our side of the fence.

Nov 08, 2009 03:41 PM

#120

Anonymous

Amanda Alligood

I think it's great that the extension was passed. As a first time homebuyer myself the tax credit was a big factor in the decision to buy back in May. Glad others will get to benefit from this as well.

Nov 08, 2009 11:15 PM

#121

Anonymous

Scott Stockdale

So if NAR's numbers are correct, then the buyers of 1,050,000 houses received around $504,000,000 of our money for something they were going to buy anyway. We're going to pay interest on this money for a long, long time, and who knows if we'll EVER pay back the principal.

Even though it may be good for my pocketbook in the short run, this program is bad for Americans in the long run. I hope that it dies of unnatural causes.

Let them eat cake as Rome burns! (yes I know it's mixed sayings, but you gotta know I've got a sense of humor, too!)

Nov 09, 2009 05:02 AM

#122

Mark Velasco

West Shores Realty - Whittier, CA

Top Producing Broker Associate

This is great news Claudette. It will keep the good times rolling.

Nov 09, 2009 03:36 PM

Mike Henderson

Your complete source for buying HUD homes - Littleton, CO

HUD Home Hub - 303-949-5848

I hope I take more advantage by marketing towards this powerful tool.

Nov 09, 2009 03:56 PM

Anonymous

John Juarez

I hope the provision that allows existing home owners to share in the largesse of the Federal Gov. (we taxpayers) helping them to sell their homes will be of benefit to the real estate industry. Many homeowners have been reluctant to sell and have elected to stay on the sidelines due to the hit that their home values have taken. Now that they will be in line for a $6,500 incentive to buy, maybe they will sell the exiting home and move up to the new home that they would rather have.

John Juarez, REALTOR

Windermere Properties of the East Bay

John@CarlMedford.com

510-6673-0686

Nov 15, 2009 02:19 PM

#125

Bob Sweazy

Prudential A. S. de Movellan Real Estate - Lexington, KY

Just got around to reading your post. Excellent!

Jan 10, 2010 01:41 AM

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