The bill to extend the tax credit for homebuyers is now on President Barack Obama's desk. (Photo: Associated Press/J. Scott Applewhite)
The bill to extend the $8,000 tax credit to first-time home buyers and open the program to move-up buyers easily cleared the House of Representatives by a 403-12 vote Thursday. The House vote came a day after the Senate passed the measure 98-0.
President Barrack Obama is expected to sign the bill on Friday.
This new program will replace the one that was part of the 2009 American Recovery and Reinvestment Act. That program is set to expire after Nov. 30 and offered up to an $8,000 tax credit to only first-time buyers.
Here’s a look at the new tax credit program for homebuyers:
• To qualify, homebuyers have until April 30, 2010 to be under contract for a home purchase and until June 30, 2010 to close the transaction.
• Move-up buyers can qualify for 10 percent of the purchase price with a maximum $6,500 tax credit. Move-up buyers must have owned their home for at least five years. First-time buyers can still qualify for up to $8,000.
• The bill also expands the income levels to qualify. Homebuyers cannot have taxable income above $225,000 for couples and $125,000 for individuals. The previous limits were $150,000 for couples and $75,000 for individuals.
• Buyers will not qualify if they are purchasing a home for more than $800,000. Non-owner occupied homes are also not eligible. This includes purchasing homes to use as an investment and vacation properties.
• Military personnel serving outside the United States for at least 90 days will have an extra year to qualify.
The real estate industry was hoping for a plan that would extend the credit through 2010, but will have to settle for one that gets them through the cold winter months and the beginning of spring. It was also looking to have the credit available to all homeowners, which also did not happen.
Senator Johnny Isakson (R-Georgia) is a former real estate agent and was a major proponent of the bill. He stated that this is likely the last extension of the tax credit.
The $6,500 tax credit is an effort to get move-up buyers back into the real estate market. The National Association of Realtors said it believes the first-time buyers credit produced 350,000 sales, although other groups have said the number is closer to 200,000 when accounting for people who would have purchased a home anyway.
About 1.4 million buyers have taken advantage of the first-time buyers tax credit. The cost of the new tax credit will be nearly $11 billion in lost tax revenue. —Rick Hazeltine