An estimated 1 million people have filed for the tax credit, but the IRS says as many as 100,000 or more of these are questionable. Tax investigators have opened up fraud investigations, to see if the $8,000 first-time home buyer tax credit is being used illegally.
$8,000 first-time home buyer tax credit scheduled to end on November 30, 2009
The $8,000 first-time home buyer tax credit is currently scheduled to end on November 30, 2009. But there is a battle looming in Washington, D.C., as the National Association of Realtors (NAR), National Association of Home Builders (NAHB) and Mortgage Bankers Association (MBA) lobby members of Congress to extend and expand the tax credit.
Last week, the National Association of Realtors testified on Capitol Hill that the housing recovery was weak and the best hope for the “still-fragile economy” is to extend and expand the $8,000 first-time home buyer tax credit.
Yesterday, these three organizations sent a letter to members of Congress imploring them to pass an extension and expansion of the $8,000 first-time home buyer tax credit.
Sen. Johnny Isakson (R-GA) Pushes An Extension and Expansion of the $8,000 Tax Credit
This morning, Sen. Johnny Isakson (R-GA) told the Senate that “It is imperative we retain the momentum we have gained” in the housing market with the current $8,000 tax credit.
“During my 33-year career in real estate, I experienced many challenges and difficult markets, but never anything like the current housing market in America. America’s families have lost trillions of dollars in home equity as home values have fallen, and in some markets, continue to fall today,” Isakson said. “The current home buyer tax credit is set to expire on November 30, and we are approaching the worst three months of the year for the housing market. It is imperative that we retain the momentum we have gained as a result of the current credit and go into the spring market with the increased consumer confidence necessary for establishing a viable market.”
Isakson said he is planning to introduce an amendment to legislation extending unemployment benefits that would extend and expand the current home buyer tax credit. Isakson’s amendment would keep the amount of the credit at $8,000, but would remove the first-time home buyer requirement, extend the tax credit until June 30, 2010, and raise the income limits to $150,000 for an individual or $300,000 for a couple.
For purchases made in 2010, taxpayers would be able to claim the credit on their 2009 income tax return. Home buyers would not have to repay the credit, provided the home remains their principal residence for 36 months after the purchase date. However, the 36 month recapture provision would not apply in the case of a member of the Armed Forces on active duty who moves pursuant to a military order and incident to a permanent change of station.
The Joint Committee on Taxation has scored the amendment at $16.7 billion over five years. Isakson said that is less than 3 percent of the total amount of the stimulus package. “We know from what has happened in the last nine months that the home buyer tax credit works.”
This should be an interesting week, as Senators jockey to push their version of H.R. 3548: Unemployment Compensation Extension Act, which is S.1699.