TAX CREDIT BEING EXPANDED TO BENEFIT CURRENT HOME OWNERS

TAX CREDIT BEING EXPANDED TO BENEFIT CURRENT HOME OWNERS

Buying a home is about to get cheaper for a whole new crop of home buyers - $6,500 cheaper.

First time home buyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill today.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First time home buyers - or anyone who hasn't owned a home in the last three years - would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

This is good news for first time home buyers that will unable to get to settlement by the current November 30, 2009 expiration date. By all comments, the pending extension will be the final extension.

Existing home owners that have owned for at least five years were not expecting an incentive to purchase another primary residence. Those that qualify now need to consider the $6,500 tax credit benefit and determine if the assistance will encourage a home purchase by April 30.