Home Buyer Tax Credit Extension

Will the tax credit be extended???

As I’ve mentioned in previous posts, the first time homebuyer tax credit of up to $8,000 is set to expire for loans closing after 11/30/09. I have been a huge proponent of extending this credit to keep the housing market recovery effort rolling into 2010. And I’ve been waiting anxiously to see if Congress will do the right thing and pass such legislation. However, in the past few days I’ve been a bit doubtful due to the widespread media coverage regarding the outlandish fraud that has been discovered surrounding the current tax credit. I was shocked to learn that the IRS was not requiring claimants to include a copy of their final HUD-1 settlement statement which would prove that they actually purchased a house. It’s like sending in for a rebate without your receipt! No wonder fraud abounds!  In the new bill a requiremet that the buyer be at least 18 years old and a copy of the HUD 1 Settlement  Statement will be required.

It looks like Congress is in fact leaning towards extending this credit through June of 2010 (all contracts must be signed by April 30,2010 to be eligible). Not only would the $8000 first time buyer credit be extended but also, up to a $6500 credit for move-up buyers who already own a home and have lived there for the last 5 years is being proposed. This time around, buyers would have to attach a copy of their settlement statement when filing the claim with their tax returns. Also, the new home’s price would be capped at $800,000 to be eligible for the credit.

The previous income limits were $75,000 for individuals and $150,000 for married couples filing jointly. The new proposal would increase those limits to $125,000 and $225,000 respectively.

The proposed extension is scheduled to be voted on by the Senate next week as part of a bill to also extend unemployment . If it passes it will move on to the Assembly. If the bill becomes law, we will have a fantastic opportunity to help more renters become home owners. However it remains to be seen whether the lack of entry-level home inventory in California will increase providing a more fair playing ground for those same buyers.

~Cari