Today's Mortgage Rates

Recently, the $8000 tax credit was extended and expanded to also include a $6,500 tax credit for move up buyers. The tax credit has been popular with people who are first time home buyers and there was quite a bit of discussion as to whether or not Congress would/should extend the deadline beyond the original November 30, 2009 deadline.

But with the tax credit extension now official, here are a few of the highlights courtesy of CNN:

The legislation also will extend the $8,000 homebuyer tax credit to contracts signed by April 30 and closed by June 30. The controversial credit, which many say has boosted home sales in recent months, was set to expire after Nov. 30.

The bill also creates a $6,500 credit for those who buy a home after living in their current house at least five years. That measure will apply to contracts signed by April 30 and closed by June 30. The current credit defines a first-time homebuyer as someone who has not owned a residence within the past three years.

The credit will be available only for the purchase of principal residences priced at $800,000 or less.

The bill will raise the adjusted gross income cap to $125,000 for single filers and $225,000 for joint filers. The amount of the credit currently begins to phase out for taxpayers whose adjusted gross income is more than $75,000, or $150,000 for joint filers.

How much will this 8000 tax credit extension cost the taxpayers?

According to the article:

The extension will cost $10.8 billion over 10 years, according to the Joint Committee on Taxation.

Whether it is worth it or not remains to be seen. I suspect that in about 30 years from now, when our children and grandchildren are worried about paying the debt we have left them – that will probably be the time to make the best judgment as to whether or not it was worth it.

Don’t ask anyone in 2010, it is too early to tell!

Is it too late to claim the first time home buyers tax credit?

No.

As it stands now, it officially ends on November 30, 2009 – which means if you are currently under contract and are in process of getting financing, you will still probably close in time to claim the $8,000 tax credit.

But if you haven’t picked out a house and gotten an accepted sales contract and are currently working on getting financing approved then you are probably too late.

Unless congress does something to extend and/or expand the credit.

According to the coverage of the tax credit by the Phoenix Real Estate guy:

• UPI is reporting that Senator Johnny Isakson, who has lead the charge for a home buyer tax credit in the Senate since Day 1 has reached a point of compromise. Isakson has always wanted to see the tax credit at $15K, not limited to first time buyers, and the income limits increased. According to UPI, Isakson will introduce an amendment for a six month extension rather than 12 month and keep the credit at $8,000. He will still try to expand it to all primary residence buyers and raise the income limit to $150K for an individual or $300K for a couple.
• The Wall Street Journal reports that Isakson is “cautiously optimistic” that an extension – with procedural safeguards attached to stem the ever-growing tide of fraudulent credit claims – can move ahead in the Senate next week.
• CNBC is reporting that Senate Majority Leader Harry Reid is making a counter-proposal to Isakson’s tax credit extension that will phase out through 2010:
  

  Under Reid’s plan, the $8,000 tax credit would be phased out over time, dropping to $6,000 in April, $4,000 in July, and $2,000 in October, before expiring at the end of 2010. The plan could come to a vote as early as next week.

What actually happens as to whether or not the tax credit will be extended and/or expanded will be decided in the coming weeks – and many people will be anxiously waiting the answer… except for those people who have already taken advantage of the credit and bought a house!

Justin McHood recently wrote about whether or not Congress would extend the federal tax credit for home buyers. Many people have legitimately benefited from being able to claim the credit on their income tax returns, and there have been calls to extend it to more Americans.

However, government investigators say over 100,0000 taxpayers have fradulently filed for the credit. About 19,000 people who filed for a total of $139 million in tax credits didn’t even buy a home, while about 74,000 filed $500 million in claims even though they didn’t qualify as a first-time homeowner, according to an article in the Wall Street Journal.

At least one of the filers was only 4 years old, J. Russell George, the Treasury inspector general for tax administration, told Congress this week.  The names of more than 500 people under 18 were on applications for the tax credit. In most of those cases, parents of the children filed the claims because their incomes were too high to claim it themselves.

So what happens to the people who attempted to commit fraud by filing the claims? They could be prosecuted and their tax preparers could face criminal charges.

While some opponents of the tax credit may see this as another reason not to extend the program, others say that more safeguards should be put in place to deter fraud if the program is continued.