CONGRESS WILL EXTEND HOME BUYER TAX CREDIT

Posted on | November 3, 2009 | 1 Comment

Congress will vote this week on the Unemployment Compensation Extension Act, which will extend and expand the homebuyer tax credit and the net operating loss (NOL) carryback.

The U.S. Senate faces procedural votes this week.  The House will consider the Senate-passed bill and vote on it by the end of the week.  The President wants to sign the bill into law Saturday.

Here is what the bill is likely to contain:

Homebuyer Tax Credit

• Extends the $8,000 tax credit until April 30^th for first-time homebuyers;
• Creates a new $6,500 tax credit for move-up buyers for the same period;
• Homebuyers will have an additional 60 days (June 30^th) to close on the home;
• New, higher income limits of $125,000 for individuals and $225,000 for couples;
• Move-up buyers must have been residing in their primary residence for 5 consecutive years out of the last 8 in order to qualify for the credit; and
• Homes over the purchase price of $800,000 do not qualify. 

NOL Carryback

• Five year carryback for NOLs in either 2008 OR 2009, not both;
• Years 1-4 allow for 100 percent use of NOLs, year 5 is limited to 50 percent of a company’s taxable income in that year;
• No size limitation or other cap on revenues; and
• Unused NOLs in year 5 are still eligible for 20 year carry forward.

The National Association of Home Builders estimates that the extended and expanded home buyer tax credit will generate 180,000 additional sales; create 211,000 jobs; and $9.6 billion in wage income, $7.2 billion in business income (small and corporate), $5 billion in Federal taxes, and $1.9 billion in state and local taxes.

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