Congress Pleases Many By Extending And Expanding Homebuyers Tax Credit

There is no question the tax credit for new home buyers has contributed to the continuous rise in home sales. With the deadline approaching, many were rushing out to find the ideal home prior to the end of November. The good news is Congress has decided to extend the tax credit, while including many more this time around.
 
Since January first-time homebuyers have been able to get a whopping $8,000 tax credit thanks to the economic stimulus package that was put in tact. While the plan was originally scheduled to expire at the end of November, the Senate decided it was the right move to extend and expand on the tax credit.
 
While first-time homebuyers and those who have not owned a home in the last three years can still get up to $8,000, the expansion also includes people who have owned their current home for at least five years. If you fall into this category, you can take advantage of a $6,500 tax credit. In order to qualify, whether a new homebuyer or not, you will need to sign a purchase agreement by April 30, 2010 and close by June 30.
 
Many assumed the tax credit would be extended, but it was getting closer and closer to the deadline worrying some. With this extension, Sen. Johnny Isakson believes this will be the last one to come. If this is the case, it gives you until April to find your new dream home.
 
The tax credit for homebuyers is one of two tax breaks now that totals out to $21 billion as the Senate has included it in a bill that extends unemployment benefits. The other tax break allows companies that are losing money recoup taxes they paid on profits earned over the last five years.
 
Although it is terrific for homebuyers to hear about the extension, the economy is still struggling greatly. Sen. Max Baucus believes it is up to Congress to continue acting creatively in order to get the economy back on the right track. Over time these kinds of tax breaks will contribute to people fighting through the recession and finding steady jobs, said Baucus.
 
Outside of homebuyers, the real estate industry has really been pushing for an extension on the tax credit. While 1.4 million first-time homebuyers have taken advantage of the incredible deal, the National Association of Realtors has estimated that 350,000 would not have purchased a home without the credit. This goes to show you what a little help can do to get people to make big decisions.
 
In all, the extension and expansion is going to cost the government around $10.8 billion in lost taxes. Although there was some questioning behind the decision, in all it passed the Senate by an overwhelming 98-0 vote.
 
There are other details you will need to pay attention to as the credit is only available for the purchase of principal homes that are $800,000 or less. It is phased out for those who make $125,000 a year or more and joint filers cannot have incomes above $225,000. Anyone that is in the military serving outside the United States will be able to take advantage of the credit until June 30, 2011 for at least 90 days.
 
The tax break will help industries as well such as retailers, homebuilders and newspapers that may have suffered losses in 2008 and 2009. There is a smaller version of the tax break for companies who have revenues of $15 million or less that will be enacted in February. This will help provide companies a quick source of cash.