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Tax credit for homeowners who own current property for 5 years - 6500 dollars!

By STEPHEN OHLEMACHER, Associated Press Writer Stephen Ohlemacher, Associated Press Writer – 19 mins ago

WASHINGTON – Buying a home is about to get cheaper for a whole new crop of homebuyers — $6,500 cheaper.

First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package enacted earlier this year. But with the program scheduled to expire at the end of November, the Senate voted Wednesday to extend and expand the tax credit to include many buyers who already own homes. The House is scheduled to vote on the bill Thursday.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30.

"This is probably the last extension," said Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits.

The homebuyers tax credit is one of two tax breaks totaling more than $21 billion that the Senate included in a bill extending unemployment benefits for those without a job for more than a year. The other would let companies now losing money recoup taxes they paid on profits earned in the previous five years.

"We are still in a world of economic hurt, and Congress must continue to act boldly and creatively," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee. "With the right mix of tax breaks and investments we will get through this recession and get folks working again."

The real estate industry has been pushing to extend and expand the housing tax credit. About 1.4 million first-time homebuyers have qualified for the credit through August. The National Association of Realtors estimates that 350,000 of them would not have purchased their homes without the credit.

Extending and expanding the tax credit for homebuyers is projected to cost the government about $10.8 billion in lost taxes. While the measure passed the Senate by a 98-0 vote, Sen. Kit Bond, R-Mo., questioned its efficiency in stimulating home sales.

"For the vast majority of cases, the homebuyer tax credit amounted to a free gift since it did not affect their decision to purchase a home," Bond said. "And for the small minority of buyers whose decision was directly caused by the credit, this raises the question of whether we are subsidizing buyers who may not have been able to afford buying a home in the first place."

The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.

The credit would be extended an additional year, until June 30, 2011, for members of the Military serving outside the United States for at least 90 days.

Expanding the tax credit for money-losing companies is projected to cost $10.4 billion.

The business tax break would allow money-losing companies to use current losses to offset taxable profits earned in the previous five years, giving them refunds of taxes paid in those years. Under current law, businesses with annual gross receipts of more than $15 million can claim losses back only two years.

The tax break would help industries suffering losses in 2008 or 2009, including retailers, homebuilders and newspapers. Congress included a scaled-back version of the tax break — for companies with revenues of $15 million or less — in the economic recovery package enacted in February. The new tax break would be available to companies of any size, providing a quick source of cash.

The U.S Chamber of Commerce has been a big backer of the tax break for money-losing companies.

"It frees up capital that they can use to maintain jobs and potentially even hire new people as the economy returns," said Caroline Harris, senior tax counsel for the U.S. Chamber of Commerce.

The tax breaks would be paid for largely by delaying a tax break for multinational companies that pay foreign taxes. It was passed in 2004 and originally was to have taken effect this year, but would now be delayed until 2018.

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The bill is H.R. 3548.

so if I have my house for 8 years, I could get a 6500 tax credit ? Am I reading this correctly ?

Yay! Sweet, as if last year's FTHB wasn't enough to drive up home prices artificially... This will be sure to drive them up by probably 15% for modestly priced homes. WTG congress! The next correction is sure to be fun.

I swear to frkn God, you should be required to take an Econ101 crash course before you can join the legislature... What a bunch of idiots.

JTFH said:Yay! Sweet, as if last year's FTHB wasn't enough to drive up home prices artificially... This will be sure to drive them up by probably 15% for modestly priced homes. WTG congress! The next correction is sure to be fun.

I swear to frkn God, you should be required to take an Econ101 crash course before you can join the legislature... What a bunch of idiots.lobbyists are influential

....Sen. Johnny Isakson, R-Ga., a former real estate executive who championed the credits

What is the benefit of giving $6500 to someone who already owns a home to induce them to swap homes? Is the idea to stimulate lots of second-home purchases? Or is there somehow a benefit to the country if Person A sells their old home, and buys a new home... they're moving from one home to another, but haven't taken any inventory off of the market. What economic goal can this possibly solve?

JTFH said:...you should be required to take an Econ101 crash course before you can join the legislature... What a bunch of idiots.The problem is that our benevolent legislators focused on the "crash" part of the course.

SUCKISSTAPLES said:wow did someone actually think they would get credit just for owning for 5 years?I did. I am glad (less upset) I was wrong!

Finally! A bail out for me!

so $8k for new homeowners, still, and $6.5k for those already owning for 5 years to trade?

so now those current homeowners' homes will be on the market. wtf is going on?!?

Rem1 said:What is the benefit of giving $6500 to someone who already owns a home to induce them to swap homes? Is the idea to stimulate lots of second-home purchases? Or is there somehow a benefit to the country if Person A sells their old home, and buys a new home... they're moving from one home to another, but haven't taken any inventory off of the market. What economic goal can this possibly solve?Somewhere (probably the LA Times) I read that the new credit is to promote move-up sales and enable the "middle-class" to move, because the new home must cost at least $300,000. The market for foreclosed and other "cheap" homes is going strong in the OC, and of course the rich are buying those multi-million dollar mansions, but us poor schmucks in the middle can't move our homes. So yes, someone will be helped by the new tax credit.