Will the $8,000 Home Buyer Tax Credit Be Extended?

Welcome back!

This is a question I’ve been hearing a lot lately…”will the $8,000 home buyer tax credit be extended?”  Unfortunately, I am no fortune teller, neither is H2 Realty’s lead Realtor Aaron Hofmann or any other real estate professionals that I know of.  Here is what I’ve found though in doing some research.

There is no official extension.

Here is where things stand.

• There is bipartisan support in Congress for extending the credit past Nov. 30th.  It is still unclear if it were to be extended, how far it would be extended, the size of the credit and how many more buyers would qualify.
• It is unclear what President Obama’s stance is on the issue.
• The latest idea under discussion is a credit worth up to $8,000 for first-time homebuyers and up to $6,500 for homeowners looking to trade up to a bigger primary residence and who have already lived in their current home for five years.
• Proponents of the credit say that if it is allowed to expire, the housing market and the broader economy will grow moribund again.
• Critics state that of the nearly 2 million homebuyers who will have gotten the credit by Nov. 30th that only about 10% to 20% bough homes solely because of the credit.

Strong September Home Sales Expected

With homebuyers rushing to complete their home purchase before the first time home buyer tax credit expires, a report Friday is expected to show strong September sales.

Home resales are expected to show an almost 5 percent increase to a seasonally adjusted annual rate of 5.35 million, up from 5.1 million in August, according to economists polled by Thomson Reuters. If the report meets forecasts it would be the best month for home sales in more than two years.

The National Association of Realtors’ report is scheduled for 10 a.m. EDT.

First time homebuyers and investors both are taking advantage of the low mortgage rates, short sales, foreclosures, and overall discounted homes.  The buyers are also eligible to take advantage of the tax credit of 10 percent of the sales price, up to $8,000 so long as the sale closes by November 30, 2009.

With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

One potential roadblock, however, emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.

At a hearing before a House subcommittee Thursday, J. Russell George, the Treasury Department’s inspector general for taxes, questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old, his office said.

While the program has widespread support in Congress, there are growing concerns about the costs. The cause, said Sen. Jack Reed, D-R.I., “is a worthy one.” But “I hope we can find ways to pay for it.”

$8,000 Home Buyer Tax Credit Used by 1.4 Million Home Buyers

The first time home buyer tax credit has fulfilled its purpose and helped increase the number of home sales since its introduction. The IRS recently reported that 1.4 million people nationwide have taken advantage of the incentive. The tax credit certainly provided incentive to first time home buyers that were on the fence about purchasing a home.

Don’t miss out on your chance to qualify for the $8,000 first time home buyer tax credit, act now and start searching for homes! The tax credit will end on December 1st…you must close on a home by this date or you’ll miss out. There are great deals out there in the Atlanta real estate market, contact us today to start your search for your dream home.