An extension of the $8,000 first-time home buyer tax credit seems to be gaining momentum through the Senate. The Obama administration called upon Congress to give home buyers the ability to claim the tax credit until April 30, 2010.
Qualified first time home buyers will be able to claim $8,000 for house purchases under $800,000. To be able to qualify couples must make under $225,000 and single buyers under $125,000, which is up from the previous $150,000 for couples and $75,000 for individuals. The bill was expanded to include current homeowners as long as the house they are vacating has been their primary residence for a minimum of 5 consecutive years of the past 8. They can claim $6,500 when purchasing a “move up” home.
Under the current provisions the home must be closed by November 30th, 2009. The new terms state that the sales contract must be signed by April 30, 2009 and the closing must take place by June 30th, 2010.
Mark Zandi, the chief economist at Moody’s Economy.com predicts that this credit would generate more home sales that the current one. He says, “It’s broader, and the industry is geared up to take advantage of it now.
Critics say that the tax credit is not an efficient use of federal resources because it has cost almost $10 billion as of now and the extension could cost as much if not more. Also that that it is overly generous to allow people who make over $200,000 per year to claim the credit and has been linked to widespread abuse.
Currently over 1.2 million borrowers have claimes $8.5 billion of the $13.6 billion that was set aside.
The agreement has to make it out of the congressional chamber but with the show of support from the White House it seems that the extension will pass….Stay tuned we should know by the end of the day.