Congress Looking to Extend and Increase Tax Credit for Home Purchase

Although this is a National story it has a huge impact on local Alameda Real Estate and housing as a whole.

Congressional Lawmakers, the Real Estate industry and businesses are calling for increasing the credit's cap expansion and extending the timeline for its implementation. The tax credit for first-time home buyers that has helped spark home sales during the last three months nationally in an otherwise miserable real estate market.

Senator Johnny Isakson, R-Ga. authored and introduced a Senate Bill and with co-sponsored Senate Banking Committee Chairman Chris Dodd, D-Conn, to expand the tax credit to $15,000 for any home buyer regardless of income.

On the House side a bill to keep the $8,000 credit in place until June 2010 and expand it to all home buyers was introduced last month by Rep. Kenny Marchant, R-Texas. It also would provide a $3,000 credit to homeowners who refinance. A second bill in the House, introduced by Rep. Eddie Bernice Johnson, D-Texas, would extend the credit to all home buyers through 2010.

The goal is to get additional buyers into the market and current homeowners to trade-up. The parameters of the current tax credit does not allow singles earning more than $95,000 a year and couples who earn more than $170,000 to take advantage of the credit. Business leaders want the income caps eliminated to spur more sales..

The tax credit scheduled to expire December 1, 2009. A tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before the deadline, but some business groups say the amount of the credit, now capped at $8,000, should be raised to $15,000 and applied to anyone who buys a home. The credit, introduced in July 2008, was expanded in February as part of the economic stimulus package.

According to the National Association of Realtors (NAR), first-time buyers account for 40% of home purchases, 5 percentage points higher than the historical average, .

The proposals may face strong opposition with growing criticism of government spending to rescue the economy and the widening budget deficit. Many economists believe that tax benefit is vital to continue the home buying trend and help stabilize prices.