US Senate Passed to extend First Time Buyer Tax Credit and A New MOVE UP BUYER CREDIT!!

Senators Agree to Extend Homebuyer Tax Credit
Legislation Pending Approval From Congress

Senators have agreed to extend the $8,000 first-time homebuyer tax credit originally set to expire on November 30. Once the Senate officially votes on the bill it will move to the House of Representatives, which strongly supports the extension. The Obama administration has also signaled its strong support for an extension of the tax credit.

Aside from the first-time homebuyer credit, the new plan would offer a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more. The tax credits would be available to buyers who sign purchase agreements on a new or existing primary residence between December 1, 2009 and April 30, 2010. Buyers would have until June 30 to close on their new homes.

There is an $800,000 price limit on all homes eligible for the credit. The income limits for all buyers would rise to $125,000 per year for individuals and $225,000 for married couples. Under the current program, the limits are $75,000 and $150,000 respectively. The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.

According to the Treasury Department, more than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the first-time homebuyer tax credit.

HOME BUYER TAX CREDIT EXTENDED? CAN IT BE REAL FIRST TIME BUYERS AND MOVE UP BUYERS?

A deal struck among key senators last night to extend the homebuyer tax credit will broaden the benefit to include existing homeowners who are buying a new home as well as first-time homebuyers.

Tax credit for move-up buyers will be less than for first-time buyers, but still significant. They will qualify for a credit of up to $6,500 and must have owned their current homes at least five years. Under the current program and the new one for 2010, first-time buyers qualify for up to $8,000 and cannot have owned a home for the past three years.

Income limits would rise under the new proposal. Individuals would have to make less than $125,000 a year and couples $225,000 per year to qualify. Under the current program, limits are $75,000 for individuals and $150,000 for couples. Move-up buyers will be subject to the same income limits as first-time buyers.

Under the compromise worked out last night, the homebuyer tax credit would be extended seven months. Homebuyers will have to sign contracts by the end of April in order to qualify and they would have until the end of June to close. The current credit expires December 1. Cost is estimated at roughly $10 billion.