$8000 First Time Home Buyer Tax Credit Extended to 2010?

$8000 Tax Credit Extended for First Time Home Buyers?

The $8,000 Tax Credit Available Now

Under the Obama Administration's housing plan -- part of the huge government stimulus package -- first-time home buyers can claim an $8,000 tax credit (or 10% of the home's value if the home is under $80,000) on their 2008 or 2009 income taxes.

The tax credit is refundable -- taxpayers who receive the credit will get a refund check or deposit for the full $8,000 even if their total taxes for the year totaled less than that.  $8,000 in the bank can be a massive help for someone just getting started with a new home.

For a home buyer to qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers must not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Home buyers must also earn less than $75,000 (individually) or $150,000 (as a couple) to qualify for the existing $8,000 first-time home buyer tax credit.

Will the First-Time Home Buyer Tax Credit Be Extended?

Many people have taken advantage of the tax credit, but time is now running out as December approaches and the deadline nears -- unless Congress votes to extend the $8,000 tax credit program well into 2010.  The real estate industry is lobbying for an extended and expanded home buyer tax credit that would help to keep home sales going.

The U.S. real estate industry wants the home buyer tax credit to be extended at least halfway into 2010, and expanded from $8,000 to a lofty $15,000.  The industry also wants the credit to be offered to all buyers -- not just first-time home buyers (or those who haven't owned a home in 3 years or more).

The Senator who originally backed the bill which provided the first-time buyer tax credit, Johnny Isakson (R) of Georgia, now says that the housing market may see another downturn if the current tax credit plan ends this year.  Isakson is sponsoring a new bill that would continue to provide an $8,000 tax credit to first-time home buyers and up to $6,500 to those who have lived in the same home for at least 5 years.  For a home purchase to qualify under the extended plan, it would have to close by June 30th, 2010.

The bill moved to a final vote, with 85 Senators voting in favor and only 2 against.  Members of Congress expect the bill to pass this week.

Check back on The Mortgage Loan Zone for updates on this and other issues.