Article published November 06, 2009
Homebuyer tax credit expanded
Bill also extends unemployment benefits
FROM BLADE STAFF AND NEWS SERVICES
WASHINGTON - Missed out on Cash for Clunkers? Congress has another deal for you: Buy a home before May 1 and collect up to $6,500 from the government. If you're a first-time homebuyer, get up to $8,000.
As part of the government's efforts to encourage people to spend money to help revive the economy, the House voted 403-12 yesterday to expand a popular tax credit for homebuyers.
The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, now goes to President Obama, who plans to sign it today.
First-time homebuyers have been getting tax credits of up to $8,000 since January as part of the economic stimulus package. But with that housing program scheduled to expire at the end of November, the House voted to extend it into the spring - and to expand it to many people who already own homes.
Buyers who have owned their current homes at least five years would be eligible, subject to income limits, for tax credits of up to $6,500. First-time homebuyers - or people who haven't owned homes in the previous three years - could get up to $8,000. To qualify, buyers have to sign purchase agreements before May 1 and close before July 1.
The credit is equal to 10 percent of the purchase price of a primary residence, up to a maximum of $8,000 for first-time homebuyers and $6,500 for others.Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a payment. Taxpayers who want immediate refunds can amend their tax returns for 2008 to claim the credit.
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.
Real estate agents say the first-time homebuyers' tax credit that's already in effect has boosted sales.
The agents hope the expanded housing credit will help stabilize housing markets during typically slow sales months in the winter.
About 1.4 million first-time homebuyers had qualified for the credit through August. The Realtors estimate that 350,000 of those buyers 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.
The homebuyers tax credit was included in a bill extending unemployment benefits for those without jobs for more than a year. The measure, which won unanimous support in the Senate on Wednesday, extends benefits for 14 weeks for all those who have exhausted their federal aid or will do so by the end of the year. Those living in states where the unemployment rate is at 8.5 percent - including Ohio and Michigan - or above get an additional six weeks. The national jobless rate is now 9.8 percent.
The fourth extension passed by Congress in the past 18 months would stretch federal aid to a maximum of 99 weeks, well beyond the extent of government intervention during past economic downturns. During the 1970s, the out-of-work were entitled to up to 65 weeks of assistance.
All local members of Congress supported the bill yesterday.
Republican U.S. Reps. Robert Latta (Bowling Green) and Jim Jordan (Urbana) have voted against unemployment extensions in the past, including Sept. 22.
Also voting in support were Democratic Reps. Marcy Kaptur (Toledo), John Dingell (Dearborn), and Mark Schauer (Battle Creek).
Mr. Jordan said he voted for the bill because it has tax credits for new homebuyers and small businesses.
Mr. Latta backed the bill because unemployed Ohioans need all the resources available to them as they try to find employment during the economic downturn, spokesman David Popp said. Mr. Latta was in a meeting and unavailable for comment.
"There are provisions in this bill that do assist small businesses. The businesses are the ones who will put people back to work, not government," Mr. Popp said.
Mr. Schauer said, "The families who receive these benefits will be putting money right back into our local economy - buying groceries, filling their cars with gas, and making their mortgage payments on time."
Miss Kaptur said the jobless benefits will aid 2 million Americans. "These families need our support as we continue our work to stimulate and revitalize this economy and create new jobs in our communities," she said.
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