Tax Credit Extension & Expansion

This is from one of the premier lobbying firms in Washington:

There will be an important vote in the Senate this week on the housing tax credit provision. The “Dodd-Lieberman-Isakson” amendment would extend the tax credit to June 30, 2010. It would expand the credit to any homebuyer and raise the income limits to $150,000 ($300,000 for joint returns). The amount of the tax credit would remain at $8,000.

Prospects: We still believe the prospects are good for extension of the tax credit. There is real concern in the Administration about the strength of the economic recovery. Treasury Secretary Geithner was quoted in the November 2^nd Business Week magazine stating: “we’re not going to make the mistake many countries made in the past of putting the brakes on too early and creating the risk of a weaker recovery with even higher levels of unemployment.” On the negative side, the stories about fraud in tax credit program (e.g. children and current homeowners receiving the tax credit) and concerns about the program cost obviously do not help.

While the industry trade associations are making a major push for the expansion of the tax credit to all homeowners, it appears unlikely that it will be expanded beyond first-time homebuyers. We will keep you apprised.

Some Veterans May Get Extension on $8000 Tax Credit

Congress moved Tuesday to give American service members another 12 months to claim the popular incentive. The House of Representatives voted 416 to 0 to pass the Service Members Home Ownership Tax Act of 2009, which pushes the credit’s current November 30 deadline back an additional year for members of the military, Foreign Service, and intelligence corps who served at least three months of qualified overseas duty in 2009. “This bill makes sure that the brave men and women who put their lives on the line every day get to enjoy the same benefits as every other American who benefits from their service,” said Rep. Charles Rangel, the New York Democrat who introduced the bill. “By extending the first-time homebuyer tax credit for service members overseas, we give these families more time to utilize the benefit, while also helping our economy continue its recovery.

Typically in Lexington and most parts of Kentucky we don’t see a lot of VA mortgage activity. But there is enough that it pays to ask all your clients if in fact they qualify. You may be able to offer them a plesant surprise.

At the moment the bill has passed only the House of Representatives, it or a similar bill needs to pass the Senate, then reconciled, then signed by the President before it is law.