Government Looks To $8,000 Tax Credit Extension for First Time Home Buyers

Celia Chen, senior director of housing economics at Moody's Economy.com in West Chester, Pennsylvania, reported on the government's $8,000 tax credit for first-time home buyers. She stated that the tax credit has helped pave the way for stabilization.

In terms of a possible $8,000 tax credit extension, reports are that Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan called on Congress to approve, among other things, that sort of extension. They also backed an extension of higher loan limits for home mortgages, and secure funding for the Housing Trust Fund.

Under the compromise reached late today, the $8,000 tax credit extension would cover first-time home buyers who sign a contract for a home by the end of April and close by the end of June. At the same time, it also creates a $6,500 tax credit for those who buy a home, but have owned a home for at least five consecutive years out of the past eight years.

Finally, under the $8,000 tax credit extension, the income limit would be raised to $125,000 a year for individuals and $225,000 for married couples. The up from the current income limits are $75,000 and $150,000, respectively.

Certainly, real estate professionals are all in favor of this $8,000 tax credit extension. Interestingly, both the Republicans and Democrats are in favor of the $8,000 tax credit extension. The compromise legislation could be attached to a bill that seeks to extend unemployment benefits.

If that choice is not made, the $8,000 tax credit extension might be moved as a stand-alone measure. Either way, both the full Senate as well as the House will have to approve the extension before it could become law.