Lawmakers Set To Expand
$8000 Homebuyer Credit
OCT-31-09
As
part of the ongoing effort to stimulate the economy, the US Senate agreed
Wednesday to extend and expand a popular tax credit for first-time home
buyers and to offer a new credit of up to $6500 to current homeowners
moving into a new residence.
On
Thursday lawmakers struck an agreement to push back the First Time
Homebuyer’s Credit deadline and expand it to allow current homeowners and
more affluent buyers to claim the popular stimulus credit.
The original tax credit provides up to $8,000 to first-time home buyers
but is set to expire at the end of November. The Commerce Department said
Wednesday that new home sales fell 3.6% in September, and some industry
representatives blamed uncertainty about the tax credit that is set to end
before December 2009.
Perhaps the most
significant change is that current homeowners would become eligible for
the tax perk as well. The current credit prevents home buyers who have
owned a primary residence within the past three years from claiming the
credit. The agreement, however, would allow current homeowners to claim up
to $6,500 as long as the property they are vacating has been their primary
residence for at least five years. Expanding the credit beyond first-time
buyers is intended to boost home sales to "move up" buyers—those moving
from one house to another—which some lawmakers, most notably Georgia
Republican Sen. Johnny Isakson, argue is essential to a housing recovery.
The
agreement also enables higher-earning Americans to claim the tax credit.
Senators moved to increase the plan’s annual income limits from $75,000
to $125,000 for single buyers and from $150,000 to $225,000 for married
couples. These limits apply to both first-time and move-up buyers,
although neither can spend more than $800,000 for a home and still get the
credit. Anyone taking the credit on a 2010 purchase can claim it on his or
her 2009 tax return. And as long as you live in the property you purchased
via the credit for three years or more, the tax credit does not have to
be repaid.
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