Homebuyer Credit Gets New Life. Hallelujah!
November 6th, 2009 categories: Chicago Real Estate News
Members of the Senate did the right thing this week: Its members reached a compromise agreement that, if eventually passed by the House, will not only extend the $8,000 federal tax credit for first-time homebuyers, but will actually offer a new credit to move-up buyers. House members are expected to vote on the compromise measure soon.
Approving the new legislation would be a wise move. Reuters quoted Celia Chen, senior director of housing economics at Moody’s Economy.com, as saying that the government’s $8,000 tax credit for first-time homebuyers will have caused 400,000 additional home sales by the time it was due to expire at midnight on Nov. 30.
That’s a lot of housing sales generated by the credit. And with the nation’s, not to mention Chicago’s, housing market still in the fragile stages of a recovery, we can use every one of those additional home sales. Remember, a strong housing market usually means a strong economy. Generating more condominium and single-family home sales will help drive the recovery of both the national and local economies.
If approved, the Senate’s new compromise would extend the current first-time buyers’ credit and introduce a new $6,500 credit for move-up buyers. These buyers, both first-timers and move-ups, must sign a contract to purchase a new or existing primary residence between Dec. 1, 2009, and April 30, 2010. Buyers would then have until June 30 of 2010 to close their housing deals.
Adding the credit for move-up buyers would be a significant move. These buyers are eligible for the credit if the home they are leaving behind has served as their principal residence for five years or longer. Income limits for all buyers would jump to $125,000 for taxpayers filing single returns and $225,000 for those filing joint returns. That’s a change from the current tax credit’s income levels of $75,000 for single-filers and $150,000 for those filing jointly. The home these buyers are purchasing can be no more than $800,000.
Is the new compromise perfect? No. But for now, it’s the best tool we have to help boost the housing market’s recovery. Let’s hope it passes without controversy.
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