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Home Buyer Tax Credit Update: A New Credit May Be On The Books By Week’s End

October 27th, 2009 categories: Buying, The Economy

Update (10-31-09) Congress is still tweaking the bill and it appears that they’ll now vote on the bill sometime next week. The current proposal now calls for keeping the credit at $8,000 for first-time buyers and giving move-up buyers a $6,500 credit (as long as they’ve lived in their current home for at least 5 of the last 8 years).

Tax Credit Update -- Congress Photo

Legislators were busy on the home buyer tax credit front earlier today, crafting what may soon be a new and improved home buyer tax credit. Well, not sure about “improved,” but it will definitely be new.

Keep in mind that all of this is still subject to change as Congress and the White House decide how best to keep the housing market moving forward without saddling the country with any extra unnecessary debt.

As of mid-day Tuesday, various real estate and media outlets were reporting that Senators had potentially reached agreement on Tax Credit III.

If nothing changes between now and the time President Obama signs it, according to what I’ve read and heard, here is what the new credit might look like:

  • It would provide a maximum $7,290 credit (10% of the sales price).. So as long as the house sells for $73,000 or more, it would qualify for the maximum credit.
  • It would allow a credit for home purchases that are in contract by Apr. 30, with a provision that they must close within 60 days of that date (June 29).
  • It would cover first-time buyers as well as move-up buyers who have lived in their current home for at least five years.
  • For first-time buyers, the maximum income limits would remain at $75,000 for individuals and $150,000 for married couples.
  • For move-up buyers, the income thresholds would be $125,000 (single) and $250,000 (married).
  • The credit would only apply to homes that sell for $800,000 or less.

Apparently, the House is willing to go along with whatever the Senate decides. And there was word that a vote on the new tax credit  might occur by mid-week.

If the new credit is passed, it would go into effect on Dec. 1, which is the day after the current $8,000 first-time buyer tax credit expires.

I imagine some of what I just wrote will change after legislators massage and try to fine tune the bill. But there seems to be ever-growing support for the credit, even though some question whether many who have used the credit would have bought anyway simply due to low interest rates and low prices.

I’ll update things as I hear more.

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This entry was posted on Tuesday, October 27th, 2009 at 11:35 pm and is filed under Buying, The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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