Federal Tax Credit Extension

The U.S. House of Representatives

passed a bill extending and ex-

panding the Federal Tax Credit for

First-time Home Buyers on Novem-

ber 5th. The bill was passed in the

U.S. Senate the day before and will

now go to President Obama for his

signature, where it is expected to

be signed this week.

The tax credit will be extended

through April 30, 2010, with a 60-

day extension if a binding contract

is in place prior to the deadline.

First-time home buyers will continue

to receive a tax credit of up to

$8,000, while existing homeowners

will receive a reduced credit of up

to $6,500. Existing homeowners will

be eligible for the $6,500 if they

have lived in their current resi-

dences for at least five years. The

bill also will increase the qualifying

income limits from $75,000 for sin-

gle tax filers and $150,000 for joint

filers, to $125,000 and $225,000,

respectively. The purchase price of

the home is capped at $800,000.

The changes, among other things,

are aimed at encouraging so-called

“move-up buyers” to sell their first

homes and buy a larger or more

expensive place.

Under additional provisions in the

bill, taxpayers can claim the credit

on purchases completed in 2010 on

their 2009 income tax returns. The

bill maintains the provision that

home buyers do not have to repay

the credit provided the home re-

mains their primary residence for 36

months after purchase, and waives

this requirement for active duty

military personnel who move due to

a military order. “The success of the home buyer tax

credit and its positive impact on the

real estate market is clear,” said

C.A.R. President James Liptak.

“According to our research, nearly

40 percent of first-time buyers said

they would not have purchased a

home if the federal tax credit for

first-time home buyers was not

offered. This underscores the sig-

nificance of the federal tax credit to

the housing market’s recovery in

California.