Hampton Bays, NY – November 13, 2009 – (RealEstateRama) — Today, Congressman Tim Bishop was joined by first time homebuyers and a local realtor and contractor to demonstrate the how the $8000 first-time homebuyer tax credit is helping turn around Long Island’s economy.
On November 6, 2009, President Obama signed into law an extension of the popular $8,000 first-time homebuyer tax credit through April 30, 2010 and provides a $6,500 credit to new purchasers who have lived in their current residence for five years or more. Congressman Bishop voted in favor of the extension earlier that week. The original tax credit was enacted in the American Recovery and Reinvestment Act and was set to expire at the end of November.
“Both Republicans and Democrats agree the extension of the homebuyer tax credit will continue to help stabilize our housing market as this tax credit has already done in recent months,” Bishop said. “In addition, this legislation raises the income limits for qualifying purchasers, so that more middle class families on Long Island are able to benefit from the tax credit.”
The press conference was held at the new Hampton Bays home of first time homebuyers, Laura and Carey McKinney, who took advantage of the tax credit. As was demonstrated at the press conference, such sales not only benefit Long Island’s housing market but also provide business to local contractors who are hired to make improvements on newly purchased homes.
According to the Long Island Board of Realtors, the combination of the $8000 first-time homebuyer tax credit, affordable prices, and record low mortgage rates have all contributed to the relatively high number of contracted home sales being reported recently by the Multiple Listing Service of Long Island. During the month of October this year, the number of contracted sales, which typically represents transactions over the past 30 days, was 3,061, up 46.6% over October 2008’s figure of 2,061. Since 1996, MLSLI has only reported over 3,000 monthly contracted sales nineteen times, 4 of which have been reported over the past six months.
BACKGROUND:
The Emergency Unemployment Compensation Extension Act:
- Extends the $8,000 homebuyer tax credit to first-time homebuyers with a binding contract before April 30, 2010, allowing 60 days to close. (Currently, it will expire November 30, 2009.)
- It also expands the homebuyer tax credit to more families –
- phasing out for individuals with income above $125,000 and for joint filers with income about $225,000 (the current law credit phases out for individuals with income starting at $75,000 and for joint filers with income starting at $150,000) and
- making a $6,500 credit available to homebuyers who have been in their current residence for five or more consecutive years out of the last eight years
- The credit is available for the purchase of principal residences with a purchase price of up to $800,000.
- To help service members take full advantage of homebuyer incentives in the Recovery Act, the bill:
- Ensures that certain payments under the Defense Housing Assistance Program (HAP) to assist military personnel selling a home that has declined in value are exempt from tax;
- Ensures service members will not have to repay the first-time home buyer credit if they are ordered to deploy to a different location and, as a result, forced to sell their home within three years; and
- Extends for one year, to April 31, 2011, the deadline for taking advantage the first-time homebuyer credit for qualifying service members, so that certain service members stationed overseas can take advantage of the credit when they return.
- To combat abuse, the bill improves administration of the homebuyers’ tax credit by:
- Requiring a minimum age of 18 to claim the credit
- Requiring taxpayers to include documentation to prove that they purchased a home
- Authorizing IRS to look at prior year returns and determine if a taxpayer is eligible for the credit
- Improving tax administration by increasing the number of electronic returns filed by return preparers
