(Originally published November 14, 2009.)
With the First Time Home Buyer Tax Credit Program set to expire at the end of November, President Obama has signed legislation extending the $8,000 credit to cover sales contracts signed by April 30, 2010. These sales must close by June 30, 2010. For those serving in the military and deployed outside the United States, the credit has been extended through June 2011.
The legislation also includes a new $6,500 tax credit for homebuyers who have previously owned a home, if that home was their primary residence for five consecutive years out of the last eight years. Home buyer income limits for both the $8,000 credit and the $6,500 credit have also been expanded. Individuals earning up to $125,000 and couples earning up to $225,000 now qualify for the maximum credit. Above these limits, the credit decreases for single buyers earning up to $145,000 and $245,000 for couples filing jointly. However, under the new program, to qualify for a credit, the cost of the home being purchased is limited to $800,000.
While the Home Buyer Tax Credit has certainly been politically popular, has it really contributed to a housing market recovery? Or, would the inevitable economic cycle along with the market forces of supply and demand have encouraged these buyers to purchase anyway? The jury is still out and it will be some time before we know whether our tax dollars were well spent.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.