The Senate voted Wednesday to renew the government's $8,000 tax credit for first-time home buyers through the first six months of next year and for the first time, the tax credit program would also enable many homeowners who buy a new primary residence to receive a $6,500 refund.
The bill, which passed 98 to 0, should reach the House floor by today, House Majority Leader Steny H. Hoyer (D-Md.) said in a statement. His office said the legislation would then go to the White House for the president's signature.
Under the bill, first-time home buyers would receive the $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. The plan would also make those who buy a new primary residence eligible for the $6,500 credit if they owned their current home for at least five consecutive years in the previous eight years.
But the measure limits the purchase price of the home to $800,000. It also imposes income caps so that people who make more than $125,000 annually and couples who make more than $225,000 would not be eligible for the program, which is estimated to cost $10 billion. In the Senate's measure, taxpayers would be able to claim the credit on their 2009 income tax return for purchases made in 2010.
Georgia Senator Johnny Isakson praised passage of the bill in his chamber but said the extension would be the last one. "Tax credits like this only work by creating the sense of urgency to take advantage of them," Isakson said in a statement.
In another positive for potential home buyers, the Federal Reserve signaled on Wednesday it also was not close to raising interest rates, saying that the economy remained weak even though the recession appeared to be over.
The central bank said it would keep its benchmark interest rate at virtually zero, and it made no change to its longstanding mantra that economic conditions were likely to warrant "exceptionally low" rates for "an extended period."
For practical purposes, analysts said, policy makers are still at least six months away from tightening monetary policy, thus creating the further sense of urgency for home buyers who want to beat the predicted possible spike in interest rates.
source: Washington Post, New York Times
