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Buying a home is about to get cheaper for a whole new crop of 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. But with the program scheduled to expire at the end of November, the House voted 403-12 Thursday to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Barack Obama will sign it today.Buyers who have owned their current home for at least five years would be eligible for tax credits of up to $6,500 for buying another home. 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 and close by June 30."This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.The home buyers tax credit is one of two tax breaks totaling more than $21 billion that was included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years."We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments, we will get through this recession and get folks working again."The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time home buyers had qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have bought their home without the credit.Extending and expanding the credit is projected to cost the government about $10.8 billion in lost taxes. The measure passed the Senate 98-0. Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales."For the vast majority of cases, the home buyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said.The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit will be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.The credit will be extended an additional year, until June 30, 2011, for members of the military serving outside the United States for at least 90 days.Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.It would let companies use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses only two years back.
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