Homebuyer Tax Credit Extension?

10/29/09 Update:  CNN is reporting that a tentative agreement has been reached on extending the tax credit for first time home buyers and adding a provision to help some current homeowners. The full release can be found by clicking the link above. As news happens it will be updated here.

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How effective has the $8,000 1st time home buyer’s tax credit been? According to the National Association of Realtors, (NAR), in Illinois, the  home buyer tax credit has brought in an additional 9,100 buyers into the market and 73,200 1st time buyers by year’s end. That is a huge impact! I recently wrote to the folks in Washington trying to get their stance on possibly extending the credit. Below is the text from an email response I received from Senator Richard J. Durbin.

Please, if you are interested in contacting Congress yourself, visit this site http://www.fixhousingfirst.com. You will have the opportunity to send an email voicing your support to this country’s leadership.  Stay tuned and check back, I will be posting additional information as the deadline nears.

Keep in mind, this credit helps the majority of homeowners, even if indirectly. When someone buys for the first time, the seller is usually buying, often up in the market. That seller then too, may be moving up. Think chain reaction of a good kind.

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October 8, 2009

Mr. Anthony Lazzari

Dear Mr. Lazzari:

Thank you for sharing your support for increasing access to the first-time homebuyer’s tax credit, which expires on November 30, 2009.  I appreciate hearing from you.

I voted for the first-time homebuyer’s tax credit, which was included in the American Recovery and Reinvestment Act (ARRA) and signed into law on February 17, 2009 (PL 111-5).  This $8,000 tax credit has successfully encouraged many individuals and families to purchase a first home.

We are working our way out of one of the worst financial crises in a generation. The meltdown in the credit markets affected all segments of the economy.  The housing market was hit particularly hard and many view troubles in the housing market as a root cause of the current economic conditions.  The current homebuyer’s credit has helped stabilize the housing market.

Proponents of extending the homebuyer’s tax credit have argued that the credit has encouraged people to buy in an uncertain market.  The credit has helped many segments of the market: realtors, homebuilders, and homebuyers.  Although the economy is recovering slowly, there are concerns that if the credit is not extended the market will freeze again.  Some also argue that it should be expanded to other buyers.

Two bills have been introduced that extend or expand the homebuyer’s tax credit. S. 1678 would extend the first-time homebuyer’s tax credit through May 31, 2010, at the current rate of $8,000.S. 1230, the Home Buyer Tax Credit Act of 2009, would replace the current tax credit for first-time homebuyers with a one-time credit for all homebuyers equal to 10% of the purchase price of a principal residence, up to $15,000. This tax credit would be in effect for one year after the enactment of the bill.

These bills have been referred to the Senate Finance Committee.  While I am not a member of this committee, I will keep your thoughts in mind as Congress considers legislation to encourage home purchases.

Thank you again for sharing your views with me.  Please feel free to stay in touch.

Sincerely,

Richard J. Durbin

United States Senator

RJD/dr

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