Fence-sitters beware: The $8,000 first-time home-buyer tax credit is about to expire, leaving one of the nation's best giveaways (unless you're a GM union worker, or banking exec, or car salesman) near its end. The tax credit, signed in February, was one of President Obama's initiatives to jolt the economy, and provides an $8,000 credit back - not just a deduction - regardless of the amount of taxes owed, leaving the purchase of a home a huge, legal income tax refuge (see your accountant for details).
But the tax credit expires November 30, 2009. Assuming a typical 30 day settlement on the purchase of a new property, buyers have only until October 30th to have a real estate contract in hand. So, assuming you are a first-time homebuyer that makes less than $75,000 ($150,000 for couples), run, don't walk, to your local agent, and begin finding the right home today for the season's best tax dodge. Unless you're a gambler, that is. The income tax credit has been politically popular, and several bills moving through Congress aim to extend the deadline - or even increase it.
One such bill, S. 1230, sponsored by Senator Johnny Isakson (R-GA), would replace the current credit with a $15,000 credit, not restricted by income or to first-time home-buyers. "The problem is in the move-up market, not the first-time home-buyer market" explains Isakson's Deputy Press Secretary Marie Gordon. Hence the extension and expansion. Isakson's bill has 14 Republican and 2 Democratic cosponsors, and was only narrowly defeated (47-50) in a recent floor vote. Gordon says the bill will come up again, and feels optimistic that the concept is gaining support.
The NAR and NAHB have both enthusiastically supported it - no surprise there - and are working toward its passage. But will it pass? Congress might just be too engrossed in health care to make it happen any time soon, or find the budget numbers so staggeringly lopsided that they cannot afford it, leaving passive buyers wishing they had acted sooner. Then again, it might pay to wait.