Senate Clears Homebuyer Tax Credit Extension
Last night the Senate cleared legislation regarding the extension of the first time homebuyer credit to reach the President this week, and it is virtually certain that President Obama will sign the legislative package which contains an expansion of unemployment benefits as well as the tax changes.
The homebuyer tax credit would be extended through April 30, 2010 and a new provision allows for move-up buyers to be eligible for a credit as well. The $8,000 maximum first-time credit will continue and couples with income up to $225,000 will be eligible, nearly $55,000 above existing guidelines. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.
In response to previous abuse of the tax credit, an investigation by the Treasury Department found nearly 600 children, aged four and up- had received $627,000 in tax credits. The Internal Revenue Service will have greater oversight to eliminate fraud.
The legislation also contains a provision supported by the National Association of Home Builders to help larger companies with net operating losses this year or in 2008, allowing companies to carry back losses to five years for either 2008-2009, and the income cap has been removed. Presently, Companies can carry back losses for two years, and income caps limited the credit to smaller companies, so this will be a boom for larger cash strapped builders.
This Week’s Real Estate Insight:
There was about a 12 month supply of single family homes on the market nationally when the first time homebuyer tax credit was enacted, now that’s down to about an 8 month supply. Hopefully, the extension of the credit will help to work through the inventory to a more balanced market that will be able to sustain its own recovery.
Tags: First time Homebuyer Credit, IRS, NAHB, NAR, President Obama, Tax Credit