Will the First Time Home Buyer Tax Credit be extended for all?Posted by Brett Tousley on Tuesday, October 13th, 2009 at 4:45pm.
Will the First Time Home Buyer Tax Credit be extended?
As we approach the deadline for closing on purchases to qualify for the First Time Home Buyer Tax Credit of $8,000, I am often asked what the chances are that the program will be extended. The answer to the question is always the same; your guess is as good as mine. However, I can give an update on what is happening in Congress where the decision will be made.
First, there is some very positive news from the U.S. House of Representatives. Last Thursday October 8, 2009 the House passed H.R. 3590, the Service Members Home Ownership Tax Act of 2009 by a vote of 416 to 0. This bill extends the First Time Home Buyer Tax Credit one full year for Military personnel (and some Civilian Federal workers) who deployed outside the United States for periods greater than 90 day. The bill is now in the hands of the Senate for their approval, which is expected in the next few weeks.
On the home front, this bodes well for buyers who have not put our lives on the line in service to our country during the last year. Many believe this bill will serve as a precursor to either, an extension of the existing tax credit, or possibly as a springboard for a new Home Buyer Tax Credit.
There are two bills currently in committee at the House of Representatives. The first, H.R. 3761, is a simple extension of the existing tax credit. This bill endeavors to change the dates of the existing law from before “December 1, 2009” to before “June 1, 2010.” The National Association of Realtors, along with the National Association of Home Builders are both lobbying for this at a minimum given the fragile state of the recovery, and the majority opinion that any recovery of our economy will hinge on a comeback by the housing industry.
The Second bill awaiting action by the House Ways and Means Committee is H.R. 3760, titled the “Home Buyer Tax Credit Act of 2009.” This bill not only extends the existing tax credit, but also increases the maximum allowable credit from $8,000 to $15,000. The credit still calculates as 10% of the actual purchase price up to the maximum, but it nearly doubles the incentive. As it stands now, the bill would also lower the period where the residence owner is subject to any recapture tax from 36 months to 24, and while the credit is still limited to principal residences, there is no mention of a restriction to First Time Buyers.
It is important to note that many more bills make it to committee than ever actually are voted on, and while in committee, there can be multitudes of changes to the language of a bill. However, it is encouraging to see that the House passed the extension for our military buyers by a unanimous vote. It is also very positive to see that there is something in written form under debate, rather than just rumors about what they are saying verbally.
Ron Brown is a FHA & VA loan Specialist with First Mortgage Company of Washington. 253-881-4699
Brett Tousley is the designated broker and owner of NW Home Brokers. He can be reached at 253-820-2745 or firstname.lastname@example.org
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