Senators Agree to Extend Tax Credit for First-Time Homebuyers, Expanding It to Repeat Buyers

Senator Chris Dodd, D-CT, has been  negotiating for several weeks with Senator Johnny Isakson, R-GA., to craft an  extended tax credit for homebuyers that would pass the Senate. Last Wednesday,  they announced agreement on a bill that would extend the tax credit for  first-time homebuyers and offer a reduced credit of $6,500 to repeat buyers who  have owned their current homes for at least five years.

The tax credit provides up to $8,000 to  first-time homebuyers but is set to expire at the end of November. The Commerce  Department said last Wednesday that new home sales fell 3.6 percent in  September, and some industry representatives blamed uncertainty about the tax  credit.

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, according to a summary of the  legislation being circulated among lawmakers.

If the full Senate passes the bill, it would  go to the House, which passed a similar bill extending unemployment benefits  last month. House leaders have also said they support extending the tax credit  for homebuyers.

It takes 45 to 60 days to close on a house,  making it unlikely a sale made today would be consummated by the end of  November, unless the tax credit is extended.

About 1.4 million first-time homebuyers have  qualified for the credit through August. The National Association of REALTORS®  estimates that 350,000 of them would not have purchased their homes without the  credit.

A survey of  first-time home buyers conducted by the California Association of REALTORS®  shows that 40 percent would not have purchased a home without the tax credit.  In tandem with organized real estate’s efforts to extend the current loan  limits, both CAR and NAR are vigorously working to have the soon-to-expire  federal First Time Home Buyer Tax Credit extended, and in that regard the  assistance of every REALTOR® is needed.

Sometime today,  please find time to contact your congressional representative today (Nancy  Pelosi for San Francisco, Jackie Speier for the peninsula). In the Senate, an  amendment offered by Senators Dodd, Lieberman, and Isakson will both extend the  program into 2010 and expand the eligibility requirements. The amendment has  been attached to a bill that will extend unemployment insurance benefits. It is  expected that the bill will pass the Senate and then be voted on by the House  of Representatives. It is critically important that every REALTOR®  member of the San Francisco Association of REALTORS® contact either  Nancy Pelosi or Jackie Speier to urge them to support the unemployment  extension bill that contains the home buyer tax credit. Please respond to the  National association of REALTORS® Call for Action.  Working together, REALTORS® can make a difference in Washington,  D.C.