Committee for a Responsible Federal Budget

Homebuyers Credit Will Likely be Extended

Oct 29, 2009 | Taxes

The Senate has reached a consensus on the issue of extending the homebuyer’s tax credit, first implemented in the stimulus bill. The tax credit was enacted early last year to help provide a boost for the housing market. While officials in the real estate industry and other supporters have claimed that it has helped to boost sales and clear out an overabundance of lower priced homes, critics have argued that most of those people would have bought homes anyway. Critics have additionally cited the difficulty of lawmakers not succumbing to pressure to continuously extend the credit, a costly expenditure of about $1 billion per month, and also that the program has been plagued with fraud.

The $8,000 credit would still be available for first time buyers if they sign a contract by April 30 and close on it by June 30. It will also now extend to some current homeowners. Homeowners shopping for a new primary residence would likely become eligible for a $6,500 tax credit if they met certain requirements. Individuals will qualify if they earn more than $125,000 annually (double for couples). While it is still not known how exactly this will be brought to the floor, Reid and other supporters hope to attach the extension to the unemployment benefits bill that may come to the Senate floor in the next few days.