Extension of the Homebuyers Tax Credit! ~the Trickle Down

Mortgage and Lending NMLS 470753

As many of you have heard, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the original deadline for the home purchase tax credit from Dec 1st to April, as well as extending a tax credit to "move up buyers'.  This means that potential home buyers other than those that have not owned a home in the last 3 years will also get a tax credit for purchasing a new home from now into June 2010. 

Of all the bills that have passed to attempt to stimulate commerce and the economy, I like this one the best because of the trickle down effect of business to others within our industry and downline from the transaction.

With every home purchase, most home buyers employ a Realtor.  The Realtor will get a commission based on the purchase price of the home.  Commerce has then taken place.  The home buyer will then in most cases get pre-qualified for a mortgage loan at their bank for the financial transaction of the purchase. Commerce takes place.    The bank in turn will utilize an appraiser to find the value of their property.  Commerce takes place, and so on as the bank will also employ a title company to check on potential liens attaching to the property, previous owners, the new buyers.  The title company will then guarantee a clean title for the bank on the property by charging an insurance fee.  The bank or home buyer may then require or request inspections to be done on the property. An inspector is hired. Inspections for termites may be required.  A home warranty may be purchased by the new home owner.  If radon is detected within the home, the homeowners will employ someone to install mitigation. If water, termite or other issues arise, the owners or purchasers will employ a servicer to treat or to install new appliances, equipment, repair work, ect.   The new homeowner will need homeowners insurance from their insurance agent.  An attorney or title company may then close the Real estate Transaction, of which they are paid a fee to facilitate. Commerce takes place again and again.

After the closing you might guess that new Mr. Homeowner will want to make the house "their home", therefore potentially purchasing paint from a paint store, Carpet from a Flooring Company, Window Treatments, Decorations, New Furniture, improvements, purchase of a lawn mower or other equipment, have repair work done, additions, ect.   You can see how the trickle down continues to vendors, servicers and retail stores. 

I have included an exerpt from the IRS website with some basics on the new Tax Credit for Purchases in 2009 and extending into 2010 below.

From the IRS Website:

New legislation, the Worker, Homeownership and Business Assistance Act of 2009, which was signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts. The new law:

  • Extends deadlines for purchasing and closing on a home.
  • Authorizes the credit for long-time homeowners buying a replacement principal residence.
  • Raises the income limitations for homeowners claiming the credit.   Under the new law,  For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.  

For the first time, long-time homeowners who buy a replacement principal residence may also claim a homebuyer credit of up to $6,500 (up to $3,250 for a married individual filing separately). They must have lived  in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased.


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Roy Giordano
RE/MAX Central, Marlboro, Manalapan, Freehold, Old Bridge NJ - Marlboro, NJ
Top Agent Marlboro NJ, Marlboro/Manalapan Homes

Hi Wanda,

Good blog, it all makes sense.

Thanks for posting

Nov 18, 2009 07:39 AM #1
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Wanda Promes

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