Under the housing program, people seeking to own a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. Current homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit starting Dec. 1 if they owned their home for five consecutive years in the previous eight.
The timing is more lenient for military families who have been deployed overseas for 90 days or more in 2008 or 2009. They would have until April 30, 2011 to sign a contract.
But the measure limits the purchase price of the home to $800,000. It also imposes income caps so that people who make more than $125,000 annually and couples who make more than $225,000 would not be eligible for a refund. Anyone who collects the tax credit but sells their home within three years of buying it must return the refund.
The program is estimated to cost $10.8 billion.
The passage of the tax credit provision was a huge win for the real estate industry, which has been lobbying aggressively to extend and expand the program. They say the tax credit has helped boost sales and clear out a glut of lower-priced homes, especially foreclosures, and that ending it would be a blow to the housing market’s recovery.
But critics of the program, including some economists, say the program is far too expensive. They say that most people who used it would have bought homes anyway. They attribute the uptick in home sales in recent months more to low prices and record low interest rates.
Questions for the lenders: The tax credit for move-ups doesn’t commence until 12/01/09. What about first-timers? Can they be under contract now, or do they need to wait until after the end of the month.
More: Do I read this right? Can you “move up” after having rented for the last three years?
I hate this, of course. The real estate market can’t shake out if we won’t let it. But as listers of higher-end homes… Thus does the legislature make whores of us all.
Robert Worthington says:
Shame on the $8000 tax credit czar! Seven more months is too long…
November 5, 2009 — 7:34 pm
Barry Bevis says:
What about a client I have scheduled to close on November 13th. They are not a first time home buyer so I guess they will want to wait to close until December 1st so they get the tax credit.
What a mess….
November 5, 2009 — 8:19 pm
Ashlee says:
I see both the good and bad side. Hopefully this will make more jump off the fence and I can make some more money in the process!
November 5, 2009 — 9:20 pm
Dan Connolly says:
10.8 billion… big whoop. We spend that in about 4 weeks in Iraq.
I, for one, am glad they passed it!
November 5, 2009 — 11:01 pm
Al Lorenz says:
The program is “estimated” to cost $10.8 billion. Clunkers was estimated to cost $1 billion. Medicare was estimated, well, you get the picture.
November 6, 2009 — 11:33 am
Greg Swann says:
> The program is “estimated” to cost $10.8 billion.
Doesn’t even matter. The ancillary costs will be immense. This is interesting. This, too. When government policies kill wealth, carrion-eaters get fat.
November 6, 2009 — 11:43 am
Robert Kerr says:
Wait! Tax cuts are bad now?
I thought they were good?
When did the rules change?
November 6, 2009 — 11:28 pm
Rod Rebello says:
According to the bill signed on 11/6, move-ups don’t have to wait until Dec. 1st. Good to go if closing after 11/6.
“Do I read this right? Can you “move up” after having rented for the last three years?” That’s my interpretation too. Can move-up if owned for any 5 consecutive years out of last 8, so renting the last 3 of the eight is allowed.
November 9, 2009 — 2:21 pm
Rod Rebello says:
One more point to my last post about move-up qualification. The definition of first-time buyer did not change with the extension. Instead of considering yourself a move-up buyer if renting in last 3 years out of 8, you would qualify as a first-time buyer. $8000 vs $6500.
November 9, 2009 — 3:46 pm