Extension and Expansion of Home Buying Tax Credit a Done Deal says reports
Tonight Calculated Risk is reporting the details of what the final negotiations have pulled together. Citing a report on Bloomberg Calculated Risk is reporting the following details in this new version of the tax credit:
Income eligibility for first-time home buyers stays at $75,000 for individuals and $150,000 for couples.
For move-up buyers, income eligibility is $125,000 for individuals and $250,000 for couples.
There is a minimum 5 year residency requirement in their current home for move-up home buyers.
The tax credit is the lesser of $7,290 or 10% of the purchase price.
The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow)
Expect bill to be signed by Friday.
Calculated Risk finished with saying:
This is obviously bad economics, but it must be good politics. The first-time home buyer impact will fade (and will probably cost over $100,000 per additional home sold). The move-up portion will probably be even less effective.
Apparently this tax credit will be combined with the extension of the unemployment benefits to avoid a veto (the real reason the extension was being held up).
I’ll wait for the final details to get confirmed before commenting too greatly, but it’s an interesting combo platter. The Obama administration had really been pushing to only provide the benefit for first time buyers, so it will be interesting to see if they got something in return for backing off that requirement.
The biggest thing that hits me is the idea of allowing a deal to be put together by the end of April but have until the end of June to close. How in the world are they going to police that? That sticks out as an obvious place for fraud to show up.
October 28th, 2009 at 1:29 pm
Hey Alec,
Good job on following the details of the Tax Credit extension. I definitely have mixed feelings about extending the credit. As a taxpayer I hate it but as a Realtor it definitely will inflate short term sales (not sure about what that does long-term though).
It’s going to be interesting to see what happens with the newly eligible buyers.
Bill Wallace – RE/MAX