It’s official. Today President Obama will sign a bill into law that extends the $8,000 First Time Home Buyers’ Tax Credit, recently set to expire on November 30, until April 30 next year. The tax credit, originally part of the American Recovery and Reinvestment Act of 2009 was intended to stimulate the real estate industry, and Congress has been talking about extending the credit for months.
1.8 million home buyers have qualified for the $8,000 first time home buyers’ tax credit so far or will qualify by the end of November. According to the National Association of Realtors (who have a vested interest in seeing the credit be extended and expanded) says 335,000 of those home buyers would not have purchased a new house if not for the credit.
With house prices still lower than their highs and not much activity in the market, the industry wants more stimulation. And the industry is getting more than the $8,000 stimulus. Formerly, the tax credit was available only to home buyers who hadn’t owned a house in the past three years. The new bill adds a $6,500 tax credit for current home owners who buy a new house, and who have lived in their current house for at least five years. The extensions comes at a cost of $10.8 billion over 10 years according to the Joint Committee on Taxation
In order to qualify for either credit, the purchase contracts need to be signed by April 30, 2010 and the closing must take place by June 30, 2010. The value of the purchased house must be less than $800,000. There is an income limitation as well, but it has been increased with the passing of this bill into law. If your adjusted gross income is above $125,000 (single filers) or $225,000 (joint filers), the maximum credit you are allowed to claim is phased out.
The extension of the home buyers’ credit was included within H.R. 3548 (Unemployment Compensation Extension Act of 2009), a bill which increases unemployment benefits for Americans for up to 20 weeks.
Do you think this extension is a good idea or with the economy beginning to improve, should we cease creating more stimuli?
Photo credit: pnwra
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{ 16 comments… read them below or add one }
On the one hand it makes me want to push up our home buying to see if we can get in on it. On the hand hand I wouldn't mind if home prices stayed low. The credit will help keep demand up for buying which will keep prices up. I could be better off with lower home prices than a $6500 credit (we've owned in the last 5 years).
Is the money coming from the funds set aside in the original stimulus bill, or somewhere else?
This stimulates nothing in the long run. All this, along with any other “stimulus”, does is pull demand forward at the cost of tens of thousands of dollars to the taxpayer for each home.
People in the market for a home are better off waiting (yet again) until this credit expires. We're nowhere near out of this housing mess. Commercial real estate has been following suit and poses a far larger problem than residential.
Wait until there is blood in the streets and then buy.
As long as we're not, once again, providing a means for people to bury themselves in debt they cannot afford the program has some merit. However we need to remember the Inspector General who oversees this program found “questionable” activities by the administrators. Not only providing these funds to 350 who were under 18 years-old, including one who was five but other more “institutionalized anomalies”. The realtors have a vested interest indeed, as do the surviving, but nearly broke banks and mortgage companies. Who really benefits?
We should toss the program. $8k doesn't do much in the major metro areas that I have lived other drain tax payer resources.
This coming spring, my wife and I are choosing to relocate from the rural South to a more urban locale in the Midwest, and our housing cost will likely triple. Why aren't we allowed to capitalize on this extension? Because we've only lived in this house for two and a half years. Which seems pretty damn arbitrary to me, but so is almost all of our government's policies.
The economy is not improving. What delusional state are you in to ask this question. Six million unemployed = Depression! Nationally, employers have dumped over 260,000 jobs, meaning that these are jobs that no longer exist. They are never coming back. Stop believe the BS.
7,000 people a day have been losing extended unemployment benefits. Over 200,000 already have lost benefits.
THE LIST of the irresponsible republicans that held H.R.3548 – Unemployment Compensation Extension Act of 2009 up for a month are: These politicians do not serve the people and do not deserve their job. Vote them out of office and a job.
Sen. John Barrasso [R, WY]
Sen. Christopher Bond [R, MO]
Sen. Jim Bunning [R, KY]
Sen. Thomas Coburn [R, OK]
Sen. John Cornyn [R, TX]
Sen. Jim DeMint [R, SC]
Sen. Michael Enzi [R, WY]
Sen. Lindsey Graham [R, SC]
Sen. Orrin Hatch [R, UT]
Sen. James Inhofe [R, OK]
Sen. Jefferson Sessions [R, AL]
Sen. David Vitter [R, LA]
Sen. Roger Wicker [R, MS]
The economy has a long long way to go. The media/reporting is irresponsible saying otherwise.
This coming spring, my wife and I are choosing to relocate from the rural South to a more urban locale in the Midwest, and our housing cost will likely triple. Why aren't we allowed to capitalize on this extension? Because we've only lived in this house for two and a half years. Which seems pretty damn arbitrary to me, but so is almost all of our government's policies.
I agree that high unemployment is terrible, and I'd love to see businesses hiring again, too.
But you can't call the media irresponsible for reporting improvement in the economy. “Recession” has a very specific economic meaning, and when the GDP grew by 3.5%, that meant the recession was over.
“In order to qualify for either credit, the purchase contracts need to be signed by April 30, 2010 and the closing must take place by June 30, 2010″. Is there any limit for starting point here?
The media isn't just “reporting” that the economy is improving. They are doing everything in their power to make things look as rosy as possible. When things were seriously tanking a few months back they didn't look at the indicators objectively. Instead they kept saying that things aren't that bad and started cherry picking as many numbers as possible.
It's not irresponsible to report the facts, but it is irresponsible to not vet these so-called “facts” first. And while recession does have a very specific meaning, where are all the reporters digging into that headline number? How come we don't hear them reporting about imputations, hedonics, etc. to give some perspective on that pie in the sky number?
You're absolutely dead on about the economy Gary. However, it's not just the Republicans who have been irresponsible. It's been all of them; Dems and Reps.
How does the program have any merit? It's a wasteful program that steals from taxpayers, lines the pockets of the politicians and give billions of dollars to the people that created this mess!
The best way to make housing affordable is to stop propping up prices. Everyone always thinks about the homeowner who wants to sell and what he stands to lose; but what about the person who's looking to buy and what he stands to gain from the lowered prices?
It's hard to say cause just like the cash for clunkers, it seems most people taking advantage would buy regardless so in that case it looks like a failure.
I am a first time home buyer, since 2007 and i havent recieve any 1st time buyers monies or stimulas pakage, how do i find out if i qualified or received something?
Closed 7-28-09,had refund in bank accaount via direct deposit on 8-8-09.