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The first-time home buyer tax credit, due to expire November 30th, has been extended through April 30, 2010. The extension passed
by both houses of Congress is on its way to the president for his signature this weekend.
Realtors have reported that the first-time home buyer tax credit has had the same positive effect on home
sales that the "cash for clunkers" program had for auto sales.
The legislation expanded eligibility for the tax credit to include people with higher incomes and those who have already owned a home for at least five of the prior eight years so long as they sign a purchase contract by April 30, 2010 and close on the purchase by June 30, 2010.
The $8,000 maximum first-time buyer credit will continue and will now be available to individuals with incomes up to $125,000 and couples with annual incomes up to $225,000 for the full credit. Home buyers with incomes up to $145,000 and couples
with incomes up to $245,000 will be eligible, but for reduced credits.
Under similar income limits, a $6,500 maximum credit will be available to those who already own a home and presumably wish to move up to a larger home.
Under the new income limits about two-thirds of all American families who own their own home may be eligible to buy a new home. While buyers will not
be required to sell their current home to qualify for the new credit, the money must be used
to buy a new "primary residence", not a vacation home or investment property. To keep speculators out of the program, people who claim
the credit but then sell the home or no longer use it as their primary residence within three years will be required to repay the credit.
The intent is to exclude from the program speculators who might purchase a home intending to flip it for a fast profit, according to Max Baucus, chairman of the Senate Finance Committee.
The current first-time buyer tax credit fired-up the housing market according to the National Association Realtors, but here's a "heads-up"
to those who considered buying a home under the prior program but didn't get around to it.
"Contact a competent Realtor and get started now. You only have until April 30, 2010."
Legislators have indicated that this costly program will not be extended again. Critics point out that only about a quarter of the homes purchased (350,000 out of 1.4 million homes sold) under the prior
program would not have been bought anyway without the costly tax-credit program. There are also concerns that the previous tax credit program encompassed high numbers of fraudulent transactions. In this version of the program, the Internal Revenue Service
has been given much wider authority to oversee the process to root out fraud.
So, if you been considering buying a "first" or a "move-up" home, now is the time to contact a competent Realtor like Judie Berger and get started.
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