Senate leaders have reached a tentative deal to extend the first-time homebuyers' tax credit that was originally passed earlier this year as part of the stimulus bill, it was reported by CNN. The agreement would extend and expand the credit to include current homeowners who want to move, according to the sources. As we move into November, the situation is still very fluid, but prospects for positive action look good.
The original credit in the stimulus bill is set to expire at the end of this month (November) and offers a tax credit of $8,000 to first-time homebuyers. Senators have tentatively agreed to extend that $8,000 credit for first-time buyers until the end of April, CNN reported. In addition, they are adding a $6,500 credit for some current homeowners who buy a new residence by then. To qualify, current homeowners must have lived in their primary residence for five continuous years.
Senators have not agreed on how the tentative deal would come up for a vote, but sources from both parties said they are considering adding the housing credit to a bill that would extend unemployment benefits. House Speaker Nancy Pelosi has indicated she also is interested in extending the homeowner credit, but House leaders have yet to endorse any one bill, according to CNN.
Organized real estate has been putting increasing pressure on legislators to extend and expand the tax credit. Here is one industry leader's view:
"The current critical loss of momentum in new home sales in recent weeks corresponds with the ending of the $8,000 first-time home buyer tax credit. For the most part, September was too late to sign a deal that could be completed by the time the credit expires at the end of November," said Joe Robson, chairman of the National Association of Home Builders. "The fact that new home sales are now heading downward just shows how important the tax credit has been for stimulating buyer demand up to this point, and how essential it is for Congress to move quickly on legislation that would extend the credit's expiration date and expand its eligibility to more buyers. Doing so would keep the housing market on the road to recovery while stimulating much-needed job growth across the economy."
Robson noted that extending the tax credit's effective date for one year and expanding it to include all home buyers would generate nearly 350,000 jobs, $28.2 billion in wages, salaries and business income, and $11.6 billion in additional tax revenues.