As the deadline for the latest extension of the $8,000 homebuyer tax credit quickly approaches, lawmakers are pretty clear about it’s end.
LA Times, December 27th, 2009:
The provision that puts up to $8,000 in buyers’ pockets won’t be renewed a third time, industry leaders and lawmakers say.
Reporting from Washington – Home buyers hoping to take advantage of a new or extended tax credit should not procrastinate: This third bite at the apple will be the last.
Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group’s annual convention last month.
Lawmakers “made us promise practically in blood that we would not come back” for another extension, Linda Goold, the Realtor group’s director of tax policy, told her members.
During the debate, Sen. Johnny Isakson (R-Ga.), a former real estate broker and a longtime proponent of the tax credit, promised his colleagues, “This is the last extension.”
And Senate Finance Committee Chairman Max Baucus (D-Mont.) said, “It is important that this tax credit does not become a permanent fixture of the tax code.”
As it stands now, buyers who meet the income eligibility requirements have until midnight April 30, 2010, to ink a deal and must close by midnight June 30 to qualify.
Congress enacted the original $7,500 first-time buyer credit as part of the Housing and Economic Recovery Act of 2008. But because the credit had to be paid back it was more like a no-interest loan than a true credit and there were relatively few takers.
So in the American Recovery and Reinvestment Act of 2009, lawmakers upped the ante to a maximum of $8,000 for new buyers who closed before Dec. 1. They also said the new credit need not be paid back unless the taxpayer moves out within the three-year period following the purchase.
This second attempt at stimulating sales worked so well that the housing lobby implored Congress to help keep the momentum going. So lawmakers extended the deadline for first-timers and added a “long-term resident” tax credit for repeat buyers who owned their current home for at least five consecutive years out of the last eight.
Incidentally, the credit is not a flat $8,000 for new buyers and $6,500 for repeat buyers. It is 10% of the purchase price up to those ceilings. There is no credit if the price of the house is above $800,000.
Other articles about this topic that might interest you:
- UPDATE: Homebuyer Tax Credit, Unemployment Bill Advances in Senate So far, I’m not eating any crow. There have been no reports about changes to the Homebuyer Tax Credit, it...
- Tax Credit Decision this week? There’s was a lot of buzz on Thursday and Friday about the possible extension of the Homebuyer Tax Credit past...
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Chris "Doc" Apodaca
Jeff Brown – BawldGuy
Scott Schang
{ 4 comments… read them below or add one }
I will be happy when this tax credit ends! Trying to buy a house now is crazy, we have never had less then 20 some competators on the same property, maybe if the “free” money is gone and there are some changes in the FHA requirement it will thin out the competition of the people that actually saved money for a downpayment (but havent reached the 20% needed in California.
California is a very competitive Real Estate market right now. I’m not sure how much of it has to do with tax credit or FHA eligible buyers as it seems that sellers are shying away from lower down payment offers.
There are some pretty good tricks out there for being “more competitive”, give me a call if you have a chance and I’ll share some of the things I’ve seen that’s working out there.
The lack of lendable inventory (the homes for sale that qualify for financing) is most likely the true culprit and source of your frustration. Most lenders are in a foreclosure moratorium right now through the holidays, until mid January, and I’m thinking you’ll see a lot more homes on the market 1st quarter of 2010.
Give me a call on my cell when you get a chance – I would like to hear more about your experiences out there and maybe I can offer a couple of tips or tricks to give you an edge over that competition!
Scott
Cell: 714-336-8286
Nowhere in your message is it stated that your present home must have been purchased within the last six years. This is what I had heard earlier. Also, if what I have heard, the price of the purchased house on which the tax credit is given must be less than the value of lthe newly purchased house. If this is also true, your message did not state it.
Hi Eugene,
There is a lot more detail about the existing homeowner tax credit in other articles I posted at the time they extended it – Here’s a link to slide show from a recent on-line class I did on the tax credit.
The law states that you must have owned your current or last primary residence for 5 consecutive years within the past 8 years. I know, it’s kind of confusing. The important “qualifying” piece here is that you have to have owned your last primary residence for 5 consecutive years to qualify.
Originally, when the extension was being debated, there was some talk of having to “buy up” in order to qualify for the previous owner credit. That did not make it into the final law. There are no restrictions as to the purchase price or value of either your current (or previous) primary residence and the purchase price or value of the home you are purchasing to qualify for the tax credit.
I hope I answered your question clearly – this part of the law is kind of hard to decipher sometimes, especially when you are reading the text of the law.
If you have any other questions, feel free to shoot me an email directly at ScottS@BroadviewMortgageCorp.com or give me a call on my cell phone anytime 714-336-8286