Home Buyer Tax Credit Extension: Yet another bill introduced

UPDATE Nov 5, 2009: The Senate and House have both passed legislation extending and expanding the home buyers tax credit. See details here!

Back in June, I wrote an article, Homebuyer Tax Credit to be Extended? Expanded? That article linked to five bills that were circulating in the House and Senate that would either extend and / or expand the existing $8,000 tax credit for first time home buyers that is currently set to expire on Nov 30 (keep in mind a home purchase transaction must be closed by Nov 30 to qualify).

As of this writing (Sept 21, 2009) all five of those proposed bills are still stuck in committee.

However, a sixth bill to extend the tax credit was introduced in the Senate last week.

Senate Bill S1678 extends the existing first-time homebuyer tax credit to June 1, 2010. It makes no changes to the requirement that one must be a first time buyer (defined as not owning a home in the last three years) or to income limits that currently exist in the current law.

Here’s what I find interesting about this latest attempt to extend the tax credit

S. 1678 is co-sponsored by Senator Johnny Isakson (R–GA). “So what?” would be a natural reaction to that revelation. Here’s what: Senator Isakson was the impetus behind the original $15,000 tax credit proposed in the Stimulus Bill. That proposal was later trimmed to $8,000 and the first time buyer restriction was added before the Stimulus Bill was passed.

Senator Isakson is also the sponsor of  Senate Bill S1230 – the Home Buyer Tax Credit Act of 2009 – one of the five other bills proposed. S1230 goes back to Sen. Isakson’s original plan of a $15K credit for any primary residence purchase, not just hose made by first time buyers.

So the junior political analyst in me says, “Hmmm. Isakson wants $15K for any purchase, and now he’s co-sponsoring another bill that only extends the existing $8K credit. Has he given up hope on his $15K for every purchase dream?”

Seems like a reasonable question in my mind (and let’s have no snide remarks in the comments about the state of my mind please).

So rather than speculate, I called the Senator’s office and asked to speak to him.  Naturally the young staffer that answered the call wouldn’t connect me to the Senator…

But he did say that Senator Isakson still fully supports and believes in increasing the tax credit, extending the deadline, and including all primary residence purchases. He mentioned that as late as last week, Isakson had been on Bloomberg and spoken on the Senate floor to garner support for his original $15K tax credit bill.

The staffer felt that the Senator co-sponsored S1678 “just in case” he can’t round up enough support for S1230. I sensed frustration on the staffers part when he talked about how long Isakson’s bill has been in committee.

And of course, even if Isakson’s bill is passed by the Senate, it would still need to get through the House. The same House that nixed the 15K credit previously…

So will the $8,000 tax credit be extended?

That is anyone’s guess. This new Senate bill does have Harry Reid as a co-sponsor. As the Senate Majority leader, Reid obviously has influence, and his co-sponsorship could indicate Reid doesn’t feel there are enough votes to get Isakson’s version past the Senate.

But there is of course, a lot of politics involved. There is little question that tax credit has stimulated housing sales. Depending on whose numbers you believe, between 350,000 and 500,000 people have bought homes because of the tax credit.  Whether those people would have bought any way is (or should be) subject to debate. And whether or not the tax credit should be extended is (or should be) a matter of debate. The National Association of Realtors and local and state associations are clearly pushing for extension / expansion. My personal take is still being formulated, though I’m leaning toward not extending it. Blasphemy! will cry many in the real estate profession, but I’ve never been a fan of big government mucking about in a market economy – there are just way too many examples of where that has failed miserably. This debate is for another post though as there’s too much to go into here.

For now, the $8,000 tax credit for first-time home buyers is available – if you close on the home before November 30. We recommend being under contract by October 15 in order to maximize the possibilities of closing by the deadline. If you’re going to hold off hoping Washington extends the credit, you may wind up kicking yourself in the end.

We’ll keep tabs on this latest incarnation of the tax credit extension…

(Photo Credit: cliff1066 on Flickr. Creative Commons License)

Hat tip to Inman News and Senator Johnny Isakson Google Alerts!

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Homebuyer Tax Credit to be Extended? Expanded?

THE TAX CREDIT HAS NOT BEEN EXTENDED. Yet. So PLEASE stop saying it has been!

$15,000 Home Buyers Tax Credit Brings 15,000 Questions – and no answers