HR 3548 - Worker, Homeownership, and Business Assistance Act of 2009 - Extension of the Tax Credit for Homebuyers

The Senate approved HR 3548 and it has been forwarded to the Oval Office for President Obama's signature. Thrown into the bill is the much anticipated extension of the tax credit for first time homebuyers. Now first-time buyers have until before May 1, 2010 to sign a purchase agreement and close before July 1, 2010. But that's not all. Long time resident's of the same principal residence for 5 years will get a $6,500 tax break on the new home purchase. There are limitations in that the house must be less than $800,000 and there is a phase out based on income. ($125,000 for individuals and $225,000 for joint filers) There is a provision requiring the buyer to be at least 18 years old. Also, our military personal serving outside the US for at least 90 days will get the credit for an additional year.

The National Association of Realtors says that the credit works and estimates that it has resulted in about 350,000 homes being bought. Others say that it is no more than a windfall for homebuyers because they would buy the home in any event and for those where the credit may in fact make the home purchase possible, then the home is too expensive and shouldn't be bought.

Perhaps what this tax credit stimulus does is simply stimulate us to "think" about buying a home now or a little sooner than we would otherwise and that alone may be enough to make it worthwhile. We don't really know, but what we do know is that it's expensive. Word is that it may cost over $10 billion in lost tax revenue.