Tax Credit for First time homebuyers extended

The U.S. Senate approved a $45 billion plan to expand a tax credit for first-time homebuyers, extend jobless benefits and provide tax refunds to money-losing companies.

Lawmakers voted 98-0 for the measure, sending it to the House. The bill then would be forwarded to President Barack Obama for his signature.

The plan would be the first major extension of provisions in February’s economic stimulus plan. The $8,000 homebuyers’ tax credit, slated to expire at the end of November, would continue until April 30 and be expanded to include people with higher incomes and some who already own homes. That would cost about $10 billion in the fiscal year that began Oct. 1, according to Congress’s Joint Committee on Taxation.

The measure includes $2.4 billion to extend unemployment benefits for as many as 20 weeks, enough to aid the jobless through the holiday season. It would loosen tax rules for homebuilders and other money-losing companies to let them claim an estimated $33 billion in tax refunds this year, according to Joint Committee on Taxation estimates.

The legislation had been delayed for weeks by Republican demands for votes on amendments to the plan. The Democrats and Republicans had been arguing over the details of the plan for weeks. No suprise there right?

The Treasury Department estimates that more than 1.4 million Americans have taken advantage of the homebuyer credit at a cost so far of about $10 billion.

The Senate plan would allow homebuyers who have lived in their residence at least five years to receive a $6,500 credit. Couples earning as much as $225,000 a year and individuals earning up to $125,000 would qualify. That is up from the current $75,000 limit for individuals and $150,000 for couples.

Those buying homes worth more than $800,000 wouldn’t be eligible for the credit. Those who sell their new home or stop using it as their main residence within three years would have to repay the credit.

What are your thoughts on the extension and added credit of$6,500 for current homeowners? Is this a positive for our business in the short term and negative in the longterm? I see it a bit from both perspectives. It will help the economy in the short term but is it fair that others have to pay for other people to get free money from the Government? Something to think about for sure.