Senators Agree to Extend Tax Credit for First-Time Homebuyers, Expanding It to Repeat Buyers
Senator Chris Dodd, D-CT, has been negotiating for several weeks with Senator Johnny Isakson, R-GA., to craft an extended tax credit for homebuyers that would pass the Senate. Last Wednesday, they announced agreement on a bill that would extend the tax credit for first-time homebuyers and offer a reduced credit of $6,500 to repeat buyers who have owned their current homes for at least five years.
The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. The Commerce Department said last Wednesday that new home sales fell 3.6 percent in September, and some industry representatives blamed uncertainty about the tax credit.
The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.
If the full Senate passes the bill, it would go to the House, which passed a similar bill extending unemployment benefits last month. House leaders have also said they support extending the tax credit for homebuyers.
It takes 45 to 60 days to close on a house, making it unlikely a sale made today would be consummated by the end of November, unless the tax credit is extended.
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.
A survey of first-time home buyers conducted by the California Association of REALTORS® shows that 40 percent would not have purchased a home without the tax credit. In tandem with organized real estate’s efforts to extend the current loan limits, both CAR and NAR are vigorously working to have the soon-to-expire federal First Time Home Buyer Tax Credit extended, and in that regard the assistance of every REALTOR® is needed.
Sometime today, please find time to contact your congressional representative today (Nancy Pelosi for San Francisco, Jackie Speier for the peninsula). In the Senate, an amendment offered by Senators Dodd, Lieberman, and Isakson will both extend the program into 2010 and expand the eligibility requirements. The amendment has been attached to a bill that will extend unemployment insurance benefits. It is expected that the bill will pass the Senate and then be voted on by the House of Representatives