Who says Congress is incapable of quick action?
On Wednesday, the Senate passed the Unemployment Compensation Act of 2009 by a vote of 98-0. Yesterday, the House passed the same measure by a razor-thin margin of 403-12. And this morning, President Obama signed the measure into law.
What does this have to do with real estate? Inside the act was the language extending the $8,000 tax credit for first-time home buyers through April 30, with escrow needing to close by June 30; the current tax credit had been scheduled to expire on November 30.
In addition, there now is an up-to-$6,500 tax credit for so-called “move up” buyers who have lived in their current home for five consecutive years over the past eight years. These buyers will receive 10% of the cost of the home or the credit, whichever is lower.
Purchases can’t be over $800,000 – I think we’ll squeak by here in Phoenix – and income limits also apply.
And there’s a price tag – the extension could cost $10.8 billion over the next 10 years, according to the Joint Committee on Taxation. Just add that to the deficit tab.
By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.
“The data on the present home buyer tax credit show that the credit has had its intended impact — sales have jumped in recent months to a projected 5.1 million for the year and housing inventory has been trimmed, thus stabilizing home prices noticeably,” said Ron Phipps, the association’s first vice president, in Senate testimony last month.
The credit, however, has also posed many problems. Critics say it’s a waste of money because most of those claiming the credit would have bought homes anyway.
One other notable caveat, since I’ve been asked in the past. No, Canadian citizens who do not pay income tax here in the states are not eligible to receive the credit.
Yes, I really was asked that once.
Got other questions? Call or e-mail me.
[tags]Phoenix real estate[/tags]