2009 Home Buyer Tax Credit Extension Gets Preliminary Approval in Senate

According to WSJ.com, Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain.

The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real-estate market a bigger boost while preventing real-estate investors from benefiting. Many property experts have cited the credit as a reason for signs of recovery in the housing market in recent months. But that recovery was somewhat undercut by the September drop in new-home sales reported Wednesday.

The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1. It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts.

While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor. Senate Majority Leader Harry Reid (D., Nev.) hopes to add it to a bill currently on the Senate floor to extend federal unemployment insurance benefits. But agreement on that hasn’t been finalized.

Bloomberg News adds:

At this time, it is believed that the credit will allow anyone purchasing (even if the property is not closed) a home by April 30, 2010 to participate and receive the full credit available. The credit will be continued (but reduced by 2% each 90 days) through the end of 2010! The credit will be slightly lessened, but it will be renewed and this extension should allow the market to continue to recover into and through next summer’s selling season. Of course, there’s always the possibility that it could be renewed at that time, as well.

The credit would be cut slightly to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.

BusinessWeek.com added this qualifier but I have not seen it mentioned anywhere else:

* The credit could only be used for homes selling for $800,000 or less.

CNN.com states:

House Speaker Nancy Pelosi has indicated she also is interested in extending the homeowner credit, but House leaders have yet to endorse any one bill.

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As you can see, in the 12 hours since this news has been released, there are several versions being reported.  I am sure we will get more details and facts in the next few days.  The good news is that is appears the tax credit will get extended and enhanced in some form.

It is unlikely that the Georgia state tax credit will be extended beyond November 30, 2009.

This is a compilation of information gathered from Bloomberg.com, CNN.com, BusinessWeek.com and WSJ.com.