Update 11/9/2009: Look like they not only extended the $8,000 First Time Homebuyer Credit, but they also added a $6,500 credit to current homeowners. Time will tell to see what the long term effects will be to the economy.
The First-Time Homebuyer Tax Credit has helped immensely in getting first time home buyers into their dream home. It has had such a strong impact on the nation’s economy that it’s prompting lawmakers to ask for an extension passed the November 1st deadline and also possibly expanding it. This is especially exciting to me since our house is currently on the market and we’ve yet to find a buyer. Hopefully, the extension of the credit will keep home shoppers out looking and coming by our house 
How The Tax Credit Works
The recent tax credit was part of the stimulus package that was passed back in early February. It was an enhancement of the credit that was passed in 2008 that only awarded $7,500 to the home buyer and also had to be paid back over a 15 year period. The most recent tax credit was far superior since it could be taken immediately. The credit covers up to 10 percent of the cost of the home, or up to $8,000. To be eligible to use the credit, you must complete the purchase by December 1st of this year. Typically, that means you will have to have made an offer on the home by the beginning of November to allow enough time for the paperwork to process.
Sen. Johnny Isakson, Republican from Georgia, was the congressman who initially introduced the credit to Congress. He had initially proposed that the amount be $15,000 which is what he is calling for now. In addition to the increase, he is wanting the the tax credit to be available to all buyers, not just to those that have been out of the market for three years.
It’s not known yet what the stance of the Obama administration on the tax credit is:
Asked about whether the Obama administration would consider extending the credit, White House spokesman Robert Gibbs said the administration’s economic team was evaluating the impact on new home sales and would make a recommendation to the president, according to the Associated Press.
The tax credit has been expensive, but it has arguably been successful in helping the ailing real estate and construction industries survive in recent months. However, like other supposedly temporary tax credits, the First-Time Homebuyer Tax Credit may end up being called the Perennial Homebuyer Tax Credit.
There is no doubt that the tax credit has been a high cost to our already tapped out national budget, but it came at a time that was almost a life saver to our fluttering real estate market. It has estimated that the total cost of the program will be approximately $15 billion which is more than double than initially thought.
Don’t Snooze Too Long
If you are still in the market to buy a home, don’t bank that Congress will definitely extend the credit. Bottom line: If you are a first time home buyer and want to purchase a house, get moving before the $8,000 first time home buyer tax credit expires.
Update 11/3/2009:
Tentatively, the Senate has agreed to extend the credit well into the spring of 2010. The New York Times reported extend the tax credit:
Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said Wednesday that new home sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit.
Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev…..
If the Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for homebuyers.
We’ll see if this goes into effect. I’m sure many are crossing their fingers that it does.
Update 11/9/2009: Look like they not only extended the $8,000 First Time Homebuyer Credit, but they also added a $6,500 credit to current homeowners. Time will tell to see what the long term effects will be to the economy.
photo credit: gimmeahug
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