Will the tax credit be extended beyond December 1, 2009?

H.R. 2801: Home Ownership Moves the Economy (HOME) Act of 2009 is a bill set to go before congress to extend the Home Buyer Tax Credit to U.S. citizens. The current home buyer tax credit allows first time home buyers (buyers who have not owned a home in the last three years) to receive a credit of 10% of the purchase price up to $8000.

There are some restrictions.

• Income must be under $75,000 or $150,000 filing jointly. There is a reduced credit for individuals earning up to $95,000 or $170,000 jointly.
  
• The home must be a first time purchase.
  
• The home may not be sold within three years of purchase or the credit will need to be paid back.

The tax credit allows the buyer to claim the credit either on their 2008 or 2009 tax return and if they do not owe enough taxes after the credit has been applied, the credit balance will be refunded to them in cash.

The tax credit is set to expire on December 1, 2009. Real estate agents and lenders are preparing for the rush to get escrows closed in time for buyers to qualify before the tax credit expires. There are still many buyers who have procrastinated or have not found a home yet and as we are heading to the final stretch of time available to close an escrow, those buyers who are just getting into contract in October may be putting themselves at risk not to close in time. With stricter lending policies and changes that have occurred in the last year, it may take longer to get an escrow processed. Many lenders these days are operating with a skeleton crew.

Home builders and Realtors are lobbying for the extension which if passed will extend the tax credit for one year and will remove the income restriction and requirement that the home be a first time purchase. Let's hope they are successful in accomplishing this goal since it will increase home sales and create jobs.

If the H.R. 2801 bill is passed to extend the the tax credit beyond the December 1, 2009 deadline there would be:

• No income limits.
• Tax credit for all home buyers, not just first time buyers.

From the article I read, it stated that it is estimated to increase home sales by 383,000 and create nearly 350,000 jobs. Something much needed for our economy.