Not only are home prices down, the federal government is about to throw in $6,500 to make a purchase an even better deal.
The intent is to stimulate sales of higher priced homes as well as entry level properties. It also could help sellers in getting a slightly higher price for their homes. However, further extensions of this tax credit are not likely, so those delaying a home purchase may lose out on a great source of financial assistance.
STEPHEN OHLEMACHER (AP) reports:
WASHINGTON — First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. With the program scheduled to expire at the end of November, the Senate voted Wednesday, November 4 to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday, November 6.
Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn’t owned a home (including condo or co-op unit) in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.
“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.
The homebuyers’ tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.
The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.
Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. The measure passed the Senate by a 98-0 vote.
Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.
The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. The new tax break would be available to companies of any size, providing a quick source of cash.
The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.