Sep 21, 2009 4:00 pm US/Eastern
Homebuyer Tax Credit Extension Proposed
PHILADELPHIA (CBS 3) ―
Are you looking to buy a house? If you're a first time home buyer, you better act fast if you want to cash-in on an $8,000 federal tax credit. To be eligible, you need to close on your new home before November 30th. But 3-On Your Side's Jim Donovan finds, that the November deadline may not be set in stone.
By the end of November, the government will have spent $15 billion dollars on this tax credit. It brought almost a million and a half buyers to the table and helped stabilize the housing market.
Now some lawmakers in Washington D.C. want to extend the credit to keep up the momentum. But some question the practicality and cost.
7-year-old Bella Segal set up a lemonade stand in hopes of helping her parents sell their house.
She says, "I was thinking that we could sell lemonade to get people to come to the house to see the house."
Bella is charging 50 cents for lemonade and a cookie. For those who pay $575,000, you'll get lemonade, a cookie, and she will throw in her house! It's been on the market for three months and so far not even a nibble of interest.
Like two thirds of homes on the market, the Segal's house is considered a "move-up" home. That part of the real estate market is still in a slump.
Jordan Goodman of MoneyAnswers.com says, "There is a big problem in the middle part of the market."
To solve that, some lawmakers are proposing to extend the first time home buyer tax credit through the summer of 2010. In addition, they want to expand the credit so that it would be available to all buyers and they also want to boost the credit to up $15,000.
But it's an expensive proposal. Mark Zandi, Chief Economist at Moody's. "We're talking real money, 75, 80, 85 billion and I think at that point, we're stretching the limit of what we can do."
Meanwhile, Goodman says, "They're spending hundred of billions on all kinds of things. It's a pretty targeted area that's actually helping the housing market and helping the economy."
First time home buyers like Moto Tohda are racing to take advantage of the current program before the deadline. He says, "$8,000 is a lot of money."
But the majority of sellers are still waiting.
As it stands right now, only first time home buyers are eligible for the $8,000 tax credit. The law defines "first-time home buyers" as a buyer who hasn't owned a principal residence during the three-year period prior to the purchase. For married taxpayers, that includes your spouse as well.
For more information on the tax credit, click on the link below:
www.federalhousingtaxcredit.com
(© MMX, CBS Broadcasting Inc. All Rights Reserved.)
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