Homebuyer Tax Credit Extended and Expanded
A couple months ago I wrote about the pros and cons of extending and expanding the popular first time homebuyer tax credit which was due to expire on November 30th, 2009. I wrote that there was a good chance that Congress would extend the credit regardless of the costs. Sure enough, this week Congress has approved an extension and expansion of the credit. Here are some details on the changes.
First of all, the $8000 tax credit will be available to first time homebuyers that enter into contract by April 30th, 2010, and close on the deal by June 30th, 2010. This is essentially a 6 months extension.
Next, the income limits for qualification have been increased from $75,000 to $125,000 for single filers, and $150,000 to $225,000 for joint filers. This increases the number of people eligible for the credit as well as the cost of the program by quite a bit since many people who could afford to buy homes now have high incomes.
Finally, there is an expansion of the credit for move up buyers. Basically, those who have owned their current homes for at least five years could buy a new home and get a $6500 credit. The new home purchased must cost $800,000 or under. The start date for this new credit will be November 6th, 2009, when President Obama signed it into law.
This credit extension was attached to a larger bill that is extending unemployment benefits by 14 weeks to 20 weeks, and it passed with very few dissenters. The new extension is projected to cost 10.8 billion in lost taxes, but if it works out like the Cash for Clunkers program or the first part of the tax credit then it will probably cost quite a bit more.
In my last post some commenters wrote that they would be very angry if late comers were given a better deal on the tax credit. Some people I know are also feeling gypped that they did not qualify for the tax credit this year due to the lower income limit. What do you think? Is the tax credit extension really necessary now? Would you take advantage of the new extension?