Expansion of the Home Buyer Tax Credit

In a multifaceted bill passed last night in the Senate, today in the House, and expected to be signed into law tomorrow by the President, the First Time Home Buyer Tax Credit has been extended and expanded to include some non-first time home buyers. Details can be found on Bloomberg.com via the following link:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ay.bYi_e6hcw&pos=8

The expansion includes a credit of up to $6,500 for current homeowners who have owned their home for at least five years. While we currently only know the basics, I would be interested in knowing the logic behind the restriction of owning a home for at least the past five years. Are lawmakers afraid that people who currently own a home, but for less than five years, might be in a negative equity position, which would entice them to use the credit to offset the loss of equity? Highly unlikely as that process would take longer in most cases than the time allowed to claim the credit.

What about the family that owned their home until moving in the past two years for employment reasons. Why do they appear to be excluded from the credit? Do lawmakers figure they have to buy anyway so why provide the incentive?

And if only current homeowners for the past five years are eligible, who are they expecting to purchase their home, a first time home buyer or another buyer eligible for the credit? Supply will not necessarily decrease if a move-up buyer purchases, as they are replacing the inventory they are buying with the inventory they are selling.

As a Colorado Springs Mortgage Lender, I would have preferred a longer term incentive for purchasing a home, possibly an increased deduction on mortgage interest vs. a government subsidy. Something that would benefit all home buyers over the long term. Yet I am aware that wouldn't provide the infusion of cash into the market that the government is looking to accomplish, although it would be less volatile in the near term.

Hopefully answers to these questions will become clear as more details are released, although even if they are, they more than likely will lead to other questions.