The first major change to the $8,000 home buyers tax credit began making it’s way through Congress last week, giving some hope to real estate and mortgage professionals, but even more to first time home buyers that have not yet taken advantage of this opportunity.
Several smaller bills were combined into the “Service Members Home Ownership Act of 2009” late last week by Congressman Charles Rangel, a New York Democrat , with a floor vote expected this week.
The intention of this new legislature is to correct an oversight in the original tax credit legislation: By requiring buyers to occupy and own their first home for 3 years to fully qualify for the credit, the program creates serious problems for military, Foreign Service and intelligence agency personnel that are subsequently transferred overseas. While they are overseas, they are not occupants of their houses, and sometimes have to rent them out or sell. Any of these events render them ineligible to retain the $8,000 credit under the current law. Ineligible buyers must then repay the credit to the IRS.
Many people associated with the writing or sponsoring of the new bill think this is a logical addition to the current legislation…and is a long time overdue. One congressman was quoted as saying, “it is absurd that thousands of Americans serving our country, away from friends and family … must choose between their service work and home ownership.”
The new tax credit bill would waive the repayment requirement when a service member must sell a home within the 36 month period because of a transfer to a new duty station or overseas, and would count service-related absences toward the 36 month requirement. Another provision in the bill would extend the $8,000 credit for an additional year for personnel who may have missed out on the initial tax credit because they wouldn’t qualify due to an overseas posting or transfer. The tax credit for these first time home buyers would be extended to November 30, 2010 from November 30, 2009, provided they served outside the U.S. for at least 3 months during the calendar year 2009.
More important for the housing market overall, however, is the precedent set by the bill’s extension of the tax credit for first time home buyers for an additional 12 months. This may be the first step towards a general extension of the entire $8,000 credit program to the same date.
Check back with DenversRealEstateNews.com for more updates in the near future.
For more information on the current $8,000 tax credit check out these earlier articles:
First Time Home Buyers Are Rushing Out to Buy
Get The Most Out Of Your First Time Home Buyers Tax Credit
Frequently Asked Questions About the First Time Home Buyers Tax Credit
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