Should the $8000 First-time Buyer Tax Credit be Extended?

The current $8000 tax credit for first-time home buyers is scheduled to expire on November 30, 2009. That means you have to make settlement on your first home by this date in order to qualify for the tax credit.

There are several different bills being presented in Congress that propose to extend this tax credit into 2010. Some of the bills propose increasing the credit to $15,000 and even making all home buyers eligible not just first-time buyers.

Most people in the real estate business believe the tax credit needs to be extended. Real estate professionals would also welcome an increase in the amount of the tax credit along with opening up the eligibility to all home buyers.

As you would imagine, there is a huge debate in Washington, DC and around the country on if the tax credit should be extended. Here are some of the agreements for and against the tax credit and its extension.

Pros

•The tax credit provides home buyers with some extra cash to help ease the cost of home ownership. Many buyers especially first-time buyers spend a significant amount of their savings on closing cost and moving expenses. The tax credit helps buyers recover these expenses. It also provides cash they may need for some home improvements, appliances, and other living expenses.

•The tax credit helps eliminate the "fear factor" of buying your first home. Buyers feel more comfortable buying a home when they know they will have extra money available if a repair is needed or an unexpected expense arises.

•The tax credit increases the number of home sales which in turn decreases inventory of homes on the market. This helps bring the real estate market into balance so that it can move forward with a self-sustaining recovery.

•Each sale provides an economic boast. Home sales create jobs. Many home buyers and sellers hire appraisers, inspectors, electricians, plumbers, construction workers, movers, etc. Buyers also make other related purchases such as new carpets, new appliances, new furniture, landscaping, etc.

Cons

•Some estimate that only 15 percent of the homebuyers receiving an $8,000 tax credit would not have bought a home without it.

•Although the tax credit has a positive effect on the real estate market, at some point the government needs to let the market stand on its own.

•People missing mortgage payments and falling into foreclosure are the real problems.

•Buyers may not spend tax credit so their specific credit will not help create jobs to stimulate the economy.

What do you think? Do the pros outweigh the cons? Should the tax credit be extended? Should the tax credit be increases to $15,000? And finally, should the tax credit be available for all buyers not just first-time buyers?