Senate To Consider Extension of Home Purchase Tax Credit Through April
Senior Democrat and Republican leaders in the Senate went on record yesterday saying that they support the extension of the $8,000 first time home buyer tax credit. The tax credit is set to expire on November 30th, 2009. Senators are proposing extending the credit through April of 2010 since the mortgage sector has not yet recovered. Voting is currently forecasted for sometime next week.
Democrat leader Harry Reid’s office has said the new bill would keep the $8,000 tax credit for first time buyers, and would add on a lower $6,500 tax credit for existing home owners who have been in their residence at least 5 years if they’re buying a new primary residence. In addition to the new coverage for existing homeowners, the tax credit income limits will be increased dramatically, to $125,000 from $75,000 for individuals and to $250,000 from $125,000 for couples.
In a deeply divided congress this has been one of the few issues That Majority Leader Reid and Minority Leader Mitch McConnell have agreed on, giving this issue significant traction in a session known for few, if any, accomplishments due to the bipartisanship. In spite of their agreement though, the bill has the chance of being delayed further because Reid wants to add on a rider for extended insurance for the unemployed, which McConnell does not support.
The current push for an extension of the tax credit is largely due to a report last week indicating that home sales reached a two-year high in September thanks to the tax credit, and another report this week from the Mortgage Bankers Association showing a sharp decline in mortgage applications in October due to the impending deadline for the tax credit. The home purchase must close by November 30th to take advantage of the credit, meaning it would be extremely difficult, if not impossible, to close if you are starting the process now.