Congress passes home buyer tax credit: Measure would extend tax break beyond first-time purchases
Missed out on Cash for Clunkers? Congress has another deal for you: Buy a home before May 1 and collect up to $6,500 from the government. If you're a first-time home buyer, get up to $8,000.
As part of the government's efforts to encourage people to spend money to help revive the economy, the House voted 403-12 Thursday to expand a popular tax credit for home buyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Barack Obama, who plans to sign it today.
First-time home buyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring - and to expand it.
Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time home buyers - or people who haven't owned homes in the previous three years - could get up to $8,000.
In addition, legislation in the bill authored by Rep. Ron Kind, D-La Crosse, extends the credit for military personnel serving outside the U.S. at least 90 days in 2009 or 2010 for one additional year, according to a statement from his office. The bill also prevents service members from having to repay the first-time home buyers' credit if they are forced to sell their home within three years of purchase because of deployment.
"The bill gives more Americans the opportunity to become homeowners," Kind said in a statement. "Through legislation I authored, I am proud to support our troops and veterans through this bill. Service members should have every opportunity to succeed and enhance their life when they return home, and this bill will help them do just that."
Real estate agents say the first-time home buyers' tax credit that's already in effect has boosted sales, much in the same way the Cash for Clunkers program increased auto sales last summer.
Critics say the tax credit is poorly targeted because the vast majority of people receiving it would have bought homes anyway.
But Susan Marvin, who owns Marvin Windows and Doors in Warroad, Minn., near the Canadian border, said the economic benefits can be broad. She said, "If people are buying a home, they are far more likely to replace products or upgrade products."
The home buyers' tax credit is one of two tax breaks totaling more than $21 billion that were included in a bill extending unemployment benefits for those without jobs for more than a year. The other tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years.