$6,500 Tax Break for Homebuyers

Congress expands its popular incentive program to include a whole new crop of buyers.  Congress passed a bill yesterday that will extend the homebuyer credit of $8,000 to new homebuyers and $6,500 to existing homebuyers until April 30, 2010.  Congress feels this will help keep the housing market going.  The house is still schedule to vote this week on the extension.  

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.  The credit would be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.

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 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.  In order to qualify for this tax break .  Some congress feel this was a free gift to some homebuyers since this incentive played no roll in them making the decision to buy a home, while others who decided to buy a home because of this tax credit make us wonder whether we are subsidizing people who shouldn’t be buying a home in the first place.

“This is probably the last extension,” said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

So if you are a buyer who is sitting on the fence of whether to buy a home or not this might be the thing that gets you to decide.

Thanks for reading…..