What's your opinion on the Government possibly extending the First Time Home buyer Tax credit?

Asked by , Tue Oct 20, 2009

What benefit or what negative impact do you see coming from this action? What would you like to see happen with the Tax Credit?

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Eric & Renee…, Agent, Redmond, WA
Thu Oct 29, 2009
Looks like they did! Short term I believe it is beneficial, long term I am not so sure.

WASHINGTON (MarketWatch) -- Senators have struck a deal to extend a popular tax credit for home buyers beyond those buying their first house, Senate Majority Leader Harry Reid's office said Wednesday.

Legislators also have agreed to extend the tax credit through the end of April, according to a Reuters report.

An $8,000 credit for first-time home buyers is set to expire at the end of November. Under a compromise reached by senators, the credit would be expanded to those who have lived in their home for five consecutive years, a Reid spokeswoman said.

The credit for repeat buyers would be $6,500.

The credit reportedly would be available for individuals making up to $125,000 a year and couples earning up to $225,000 per year, up from the current income limits of $75,000 and $150,000, respectively.

Reid wants to attach the tax-credit measure to a bill that would extend unemployment benefits.

Senators agree to extend tax credit for first-time homebuyers, expanding it to repeat buyers
The Associated Press

Senators have agreed to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November. A spokeswoman for Senate Majority Leader Harry Reid said senators agreed Wednesday to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years.

A congressional aide said the tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes. The aide, who spoke on condition of anonymity, was not authorized to publicly discuss the deal.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Copyright © 2009 ABC News Internet Ventures
1 vote
Victor Quiroz, Agent, Covina, CA
Tue Oct 20, 2009
The tax credit as we know is ending on December 1, 2009 but there is a lot of chatter about extending the credit until June of 2010. No bill extending the credit has been passed but the major changes that have been discussed include opening up the credit to all buyers not just first time buyers.

Remember cash for clunkers helped the auto industry but once it went away car sales fell off a cliff. The tax credit may have a similar impact on the housing market if it is open to all buyers but we will have to wait and see what happens.
Web Reference:  http://www.victor4homes.com
1 vote
Me, Home Buyer, Oregon
Thu Oct 29, 2009
For years my husband and I have "talked" about buying a home and this was just the incentive we needed to even start actively looking. We are going through the whole buying cycle now. We've been working on my husbands credit inorder to get approved for a home loan for most the year. We've worked hard!! Raising my credit score by more than 60 points(prior 686 high) and his by nearly 100 (prior 523 high)!! It's soo close I can taste it. (homeownership) We found the house we wanted well over a month ago. However the bank took so long on their end when we were told it would only take a couple weeks at the most before we could make an offer (now 6 weeks later) there is a sale pending on OUR house and we had to come in as a back up offer. Problem is we won't know anything untill Nov. 15 wether or not the current sale goes through on the house. Leaving us with only 2 weeks to close (and Thanksgiving) befor the deadline. I don't see that happening. We still have 3 days to find another house and close in time to get the $8,000. However like us, I believe that the money was a great incentive for most FHBs to buy a home now but wasn't the reason. Homeownership has always been a part of the American dream! This $8,000 was a wake up call to many (such as myself) to get up off our toosh and DO something about achieving it!! Buying a home now wasn't about the money... we are going to sit tight on our offer and hope and pray that 1)we get the house and 2)that somehow the money will get us. We'd like to do some work on that property. $8,000 can go a long way! I think the deadline should be extended to give even more poeple the incentive to buy their first home. It did me. And if I miss the deadline or it's not extended that's okay homeownership was the true end result we were looking for! But $8,000 on top of that... wouldn't hurt either. -Kelly
0 votes
Jesse Sierra, Agent, Pomona, CA
Tue Oct 20, 2009
The negative aspect is that it is funded by tax payers.

We are all paying for this incentive, since 1st time home owners don't need to pay it back.

Just my 50 cents.

0 votes
Jenny A. Le, , California
Tue Oct 20, 2009
Ironically, refer to here to view the $8K benefits described by MBA, NAR, and NAHB trade associtions.

Of course, to maintain your personal objectiveness, always read these similar articles with a grain of salt....http://tinyurl.com/8KTaxCreditBenefits
0 votes
Jenny A. Le, , California
Tue Oct 20, 2009
Another way of considering the tax credit is to help "qualified" FHB with their down payment or for repair costs.

Currently, many homes on the market need repairs (especially distressed homes); and the lender are requiring minimum level of down payment. There's very little, if any, 100% finance loan program available in the current environment.

While I agree that home buyer should not buy if they are not financially stable or strong. However, not all FHB are "not ready to buy a house" or "can not afford a home". Not everyone jumped in during the boom. There were qualified FHB who want to jump in but they couldn't because of fierce competition and the steep price gains.

I've just closed 2 transactions where the buyers are gainfully employed, have the 20% down payment, credit scores in +750 range ... one set of buyers used the $8,000 credit for repairs on a home locating in a highly desirable area in the OC, where it was "unreachable" to them a few years ago. The other buyers will use the credit as "maintenance/emergency" repair funds, which provide them peace of mind for when unexpected repairs arise. Both set of buyers are amending their 2008 tax returns to get the credits now.

The purpose of the tax credit is to "stimulate" the economy. So my buyers who used the $8,000 credit for repairs (total repair costs = $25K all will be paid in cash) - they've hired 2 painters, a plumber, a flooring specialist, a roofer, a termite repair specialist, purchased new carpet, gallons of paint, bathroom fixtures, windows, which in turn these people purchased materials at Home Depot or distributors, which in turn provide much needed jobs (in multi-industries) to the unemployed people looking for work...this is throwing good money into a diverse pool of industries to create jobs for the unemployed.

All of us who are in the real estate business have the responsibility to help our clients with proper disclosures and guidance to enable them to make prudent decisions.

Hence, in my oppinion, the housing tax credit is more effective than the "cash for clunker" program because it benefits multi-industries (buiding, architect, construction, service, manufacturing, contractors, real estate sales, title companies, escrow services, appraisers, hazard insurance companies, etc) vs. limited jobs mainly concentrated in the auto industry (parts manufacturing, steel (we import most from China), paint, auto sales, etc)
0 votes
, ,
Tue Oct 20, 2009
Thanks Joan and Victor! I am sure that you are aware that there are many people that are divided about this issue and this is exactly why I created the question. Many opinions and I am excited to hear as many of them as possible. Both are great points and thanks for taking the time to share your opinion.
0 votes
Joan Braunsc…, , Morris County, NJ
Tue Oct 20, 2009
Hi Lucy,

I know that I might be in the minority opinion here, but I honestly feel that if people need government help to buy a house, at tax-payers expense, then they are perhaps not ready to buy a house. Although there has been a definite increase in activity for first time homebuyers because of the tax credit, in the long run, I can not imagine this being beneficial.
People should buy a home when they can afford a home. $8000 should not be why they decide to purchase the largest investment of their lives. I consider that a bandaid on a huge, complicated problem which would be better addressed by dealing with the unemployment issues, not throwing good money after bad.
Just my humble opinion.
0 votes
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