The proposal extends the existing credit for first-time home buyers, while offering a new credit of up to $6,500 for some existing homeowners. The reduced credit would be available to all home buyers who have owned their current residence for a consecutive five-year period in the past eight years, and the home purchased must be $800,000 or less. The qualifying income limits have been raised to $125,000 for individuals and $250,000 for couples, from the current $75,000 and $150,000. To qualify for the credit, buyers must have sales agreements in hand by April 30, 2010, and they will have until June 30 to close. The proposal still has to be voted on.Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan are in full support of the Senate’s proposal and have called upon Congress to approve other key housing measures that include the tax credit. “We welcome efforts taken by Congress to extend the First-Time Homebuyer Tax Credit for a limited period. This credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide,” said Secretaries Geithner and Donovan. “In extending the credit, we urge Congress to include strict measures to combat tax fraud and protect responsible homeowners.”
Although the housing market has recoverd somewhat, new home sales have not improved. Those arguing for the extension are hopeful that the credit will help new home sales as well as continuing to support existing home sales. The new proposals also include provisions for preventing real estate investors from benefitting from tax credits that are aimed at helping ordinary consumers. While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor.
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