Home buyers tax credit renewed

Incentive extended, widened beyond first-time buyers

First-time home buyers 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 House voted 403-12 Thursday to extend and expand the tax credit to include many buyers who already own homes. The Senate approved the measure Wednesday, and the White House said President Obama would sign it today.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time home buyers -- 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.

The bill also raises the income ceiling. The credits will phase out for individuals with incomes above $125,000, up from $75,000. For joint filers, it will phase out for those with incomes above $225,000, up from $150,000.

The legislation gives the housing industry reason for more optimism, according to Illinois Association of Realtors President Michael Onorato.

"We do have some reasons to be excited," he said. "What the first-time buyer credit did was significantly impact the lower end of the market in terms of price points. By expanding it, we're going to finally see some move-up buyers. We're going to see that impact a little higher level of the marketplace."

The real estate industry has been pushing to extend and expand the housing tax credit.

More than 51,000 families in Illinois had taken advantage of the first-time home buyers credit as of mid-September, among 1.4 million that had done so nationally, according to the Internal Revenue Service.

The National Association of Realtors had estimated that 1.8 million to 2 million first-time home buyers would take advantage of the credit this year, including roughly 350,000 additional sales that would not have taken place without the credit.

Extending and expanding the credit is projected to cost the government about $10.8 billion in lost taxes.

The credit is available for the purchase of principal homes costing $800,000 or less. Vacation homes are ineligible. 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.

Contributing: Francine Knowles