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In the next few days Congress is expected to pass legislation extending, expanding and altering the homebuyer tax credit. The original $8K tax credit was limited to first time homebuyers and is currently set to expire November 30, 2009. At the urging of President Obama, it looks like Congress will extend and expand the credit. Its good news for news for all…and here are the expected details.

1. No longer just first time buyers! We expect the $8,000 tax credit to still be available to first time buyers (must be under contract by April 30, 2010 and must close escrow no later than June 30, 2010) but we also expect it to be available to current homeowners who have lived in their home for at least five years. We expect this existing homeowner tax credit to be limited to $6500—a bit less than what is offered to first time buyers but still a nice addition for those looking to move up or down! Both first time and existing homeowners must continue to live in the newly purchased home for 3 years or be forced to repay the credit.
2. Higher income limits before phase out! The tax credit is expected to increase from a single purchaser income limit of $75,000 to a single purchaser income limit of $125,000. Similarly for married couples, the income limit is expected to increase from $150,000 to $225,000.
3. Purchase Price Limit: $800,000 We expect the credit to have a new aspect---a purchase price limit. The final bill will likely state that the credit will not be available to a purchaser who purchases a home in excess of $800,000.

And one last note: Anyone who utilizes the program in 2010 will likely be able to take the credit on their 2009 taxes—a nice bonus come April!

The tax credit combined with current, low interest rates means it’s a great time to sell—while buyers are motivated by the current and expected, bigger and better tax credit. I’ll update you when the official details are released…but we expect the final terms to be fairly identical to those stated above.

If you have any questions, please do not hesitate to ask! You can email me at johnsonlaw@sbcglobal.net or call me @ (714) 863-5485.

-Melinda Johnson