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Extension, expansion of tax credit good news for all
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The signing into law this past week of an extension of the First Home Buyer Tax Credit also added a new twist. This time an existing homeowner can cash in on the rebate.
The 2009 version of the tax credit, which was passed last March, was set to expire on December 1, 2009. However this $8,000 credit was extended to April 30, 2010 (the date the home must be purchased by) and must close by July 1, 2010.
What is different this time is the incentive that includes offering $6,500 to homeowners who have lived in their current residence for at least 5 consecutive of the last 8 years prior to the closing of the next purchase.
This should help those homes sell that are priced outside of the first time homebuyers market, and have had very little change in overall interest from prospective buyers dating back to 2008. Also it would give homeowners an extra incentive to move out of that crowded house and into one that may be at a bargain price.
The main problem with the original $7,500 tax credit passed back in 2008 was that it had to be paid back in the next 15 years. While that part was eliminated with the March credit, the next bill failed to address buyers above the bargain basement price range, especially with the loan standards getter tighter and tighter. Now the 3rd tax credit goes a step further, including existing homeowners.
This may lead to a new rush of homesellers putting their houses on the market, trying to cash in on the $6,500 while either upgrading or downsizing their current residence.
What this new bill signifies is that, despite some good news about the recovery of the housing market, we are still a long way off. And how and when will these stimulus bills be paid for, you ask? Another question for another time.
