Homebuyer Tax Credit Extension? UPDATE…APPROVED!

As predicted by NJ Real Estate Guys, the Homebuyer Tax Credit has been extended through April, 2010.  The senate voted last night to put a halt to any changes and add-ons to the bill so it is now fast – tracked. Here is a summary of what it looks like:

$8000 credit for first time home buyers
$6500 credit for “move-up” buyers. These are people who have lived in their current residence for at least 5 of the last 8 years.
Primary residence purchases only
Here is the best part for higher realty prices in NJ:  Income limits have increased for joint filers for $225,000. (this will have a great impact in our market)

The following was written on October 23.

Home shoppers looking for that $8,000 tax credit:  Have you gone into contract yet?  Better hurry.  The deadline to close on your home via loan or other means is November 30, less than 40 days from now.  BUT WAIT!  Is it really going to die on November 30 and leave everyone out in the cold?  Some say yes, but more people are saying no. 

Here are both sides to the story.  We all know the slowest season for real estate activity is in the winter.  If the tax credit expires on November 30th, it will smack the housing industry with a double whammy.  September home resales increased by 9.4% to a 5.57 million annual rate from 5.09 million in August, according to National Association of Realtors.  September’s numbers far exceeded economists predictions who expected gains of 5.5% in sales to a rate of 5.38 million.  Easy answer as to why all the activity:  November 30th. 

The housing/mortgage crisis was the biggest blame for the financial meltdown.  Restricting sales will further weaken the economy which will create an anchor affect on recovery efforts.  Without recovery, unemployment goes up and we see things get worse before they get better….despite the recent equity rallies.  Bottom line is we need this to be extended.  Taxpayers are all hoping that this is extended as it will give qualified homebuyers some extra cash in their pockets, which will stimulate spending.

Congress, however, is a little more reluctant to extend.  There have been many cases of fraudulent claims and there are fears that the IRS simply won’t be able to keep up with the work.  Extending the tax credit by 6 months will cost the U.S budget between $15-$17 million.  Some in Congress say that enough is enough and we need to start rebuilding the budget, but others say it is money well spent.  After all, the money comes from the already approved Stimulus package of $800 billion.

Senator Johnny Isakson believes lawmakers will eventually move to extend the credit in one form or another. “I don’t believe either this administration or the current leadership would look November 30 in the eye and let this thing die,” he says. White House spokesman Robert Gibbs said this week that the administration is evaluating the credit’s impact and will make a recommendation to the president, the Associated Press reported. The outlook for an extension appears to have brightened. Scott Talbott, a top lobbyist at the Financial Services Roundtable, put the odds of its extension at 50-50 earlier this week, but he said that the chances improved to 75-25 after Reid endorsed the six-month extension. Still, as lawmakers remain consumed with other matters, such as healthcare reform, action on the tax credit is unlikely to take place until the expiration date nears, Talbott says. “Congress works best on deadlines and crisis,” he says. “And we sort of will have both with this one.” (USNews)

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