The United States Senate has voted by a 98-0 margin to approve an extension of the $8,000 first-time homebuyer tax credit until April of 2010, thus negating the previous deadline of Nov. 30, 2009. The bill, which primarily focuses on unemployment benefits, HR 3548 or the Unemployment Compensation Act of 2009, sponsored by Rep. James McDermott (D-WA), has been amended to continue giving an $8,000 tax credit to first-time homebuyers and provide a $6,500 tax break to qualified homeowners looking to move up to middle-market homes that cost no more than $800,000. For homeowners looking to move up, the bill requires that they have must have lived in their current house for five of the last eight years consecutively.
HR 3548 would raise the qualifying income levels to $125,000 for individual income tax filers and to $225,000 for joint filers. President Barack Obama is expected to immediately sign the legislation once it crosses his desk.
To track the progress of HR 3548, the Unemployment Compensation Act of 2009, click here.
And those with incomes slightly over the maximum limits -- up to $145,000 for individual filers or up to $245,000 for joint filers -- would get a smaller credit that decreases as income rises.
"Every economist will tell you we have to steady the housing market before the economy will turn around," said Sen. Christopher J. Dodd (D-Conn.). "We can't afford to let this tax credit expire now."
Though there are more effective forms of economic stimulus, the housing tax credit is worth extending and expanding because it directly addresses the housing market, said Mark Zandi, chief economist at Moody's Economy.com.
He estimated that the existing tax credit has added 400,000 new home sales this year that would not otherwise have taken place. That's nearly 7% of about 6 million in total sales.
"From a macro-economic perspective, nothing is more important than stabilizing housing values," Zandi said.
But some economists and housing experts doubt that the existing credit is truly boosting sales in a significant way. They also question whether opening the credit to families earning as much as $245,000 is the best use of the $11 billion the expanded program would cost.
Senate moves home buyer tax credit froward crucial step, could pass tomorrow
By: Eric Wolff — November 2nd, 2009
Looks like Congress will be extending that homebuyer tax credit afterall. First time homebuyers, known to the IRS as people who haven’t owned a home in the last three years, have been frantically trying to get into contract on a house in time to get an $8,000 federal tax credit due to expire on Nov. 30. But some of them have had such a hard time outbidding cash buyers that they despaired of making the deadline.
Well, they’re in luck. The Senate just passed a cloture motion to end debate on a bill, 85-2. that will extend the tax credit to April 30, 2010. The bill should find it’s way through floor votes in both Senate and the House by the end of tomorrow, if Senate Majority Leader Harry Reid has his way.
But the bill will not just be extended, it will also be expanded. From Bloomberg:
Homebuyers who have lived in their prior residences for at least five years could receive a credit of $6,500 under the plan. Couples earning as much as much as $225,000 and individuals earning up to $125,000 would also qualify. That’s up from the current $75,000 limit for individuals and $150,000 for couples.
Also, anyone taking the credit from a home purchased in 2010 would be able to take the credit in 2009.
So, to recap: Homebuyer tax credit takes a major step toward extension and expansion. No doubt there’s a great rhyming headline there somewhere.