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Nov 6, 2009 6:39 pm US/Central
Home Buyer's Tax Credit Expanded
(WCCO)
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Continued weakness in the housing market, especially in the median to upper bracket homes, convinced Congress that more help is needed.
CBS
With the clock ticking on a first time home buyer's tax credit, realtors like Connie Nompelis have been swamped. They've been trying to get deals closed by month's end. The federal tax credit was initially set to expire Nov. 30.
However, continued weakness in the housing market, especially in the median to upper bracket homes, convinced Congress that more help is needed. On Friday, President Obama signed legislation to extend and expand that lifeline to many more home buyers.
For realtors like Connie, the extension is welcome news! The Century 21 realtor says, "Well, hopefully it's going to keep me busy, this summer the tax credit had really fueled a lot of purchases."
The $8,000 tax credit for first time buyers is now extended 5 months. Purchase agreements must be written on homes by April 30, 2010.
The biggest change to the incentive will expand the credit to people who already own a home. Current homeowners will qualify for a $6,500 tax credit, so long as they have lived in that home for 5 of the last 8 years.
However, to qualify under either incentive there are income limits. The extension increases those limits. To get the first time homebuyers tax credit couples can have a combined income not exceeding $225,000. For a single person the limit is $125,000.
The same limits apply to existing homeowners looking to take advantage of the credit. A couple cannot have combined incomes exceeding $225,000. A single person will be capped at $125,000 of income.
Realtor Nompelis added, "so, I hope this will just keep it going and I'm really excited that now we can bring up move-up buyers and second time around'ers."
Because the initial tax credit was exclusively for first time buyers, most homes that have been sold under the program were priced under $190,000. The expansion of the program is aimed at the housing market's middle segment -- those more expensive "move up" homes.
Brian Finstad just sold a house in South Minneapolis and said the first time buyer was motivated by the tax credit. Now, he will pay cash for a home on the city's north side. He wants to invest in a home where he can reap the benefits of "sweat equity."
"It feels good," said Finstad. "I think the market was just picking up enough that it enabled us to sell our house but yet there's really good deals out there that we can take advantage of before all the incredible deals are gone."
Realtors like Connie Nompelis said it is enthusiasm like that which will carry the real estate market through the typical slow months of the looming winter.
For more information, click on the link below.
NAR Frequently Asked Questions: Homebuyer Tax Credit Changes
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