$8,000 First-Time Homebuyer Tax Credit Extension?

On October 8, 2009 the House of Representatives voted 416 to 0 to pass the Service Members Home Ownership Tax Act of 2009 which extends the current $8,000 first-time homebuyer tax credit for another 12 months for members of the military, Foreign Service, and Intelligence Corps who served at least three months of qualified overseas duty in 2009. The current program is set to expire on November 30, 2009. In my opinion there is definitely justification for extending the credit to members of the military and the like because serving abroad for our country obviously makes it very difficult for those members to look for a house and take advantage of the program. At the moment the bill has passed only the House of Representatives so it is not law yet. But once the bill or some variation thereof passes the Senate it will be sent on to the President to be signed into law. As for the current first-time homebuyer tax credit, which is set to expire on November 30, 2009, there are discussions about extending the credit an additional six months. The problem is that there are several versions of the extension of the tax credit being proposed. The first, and most likely to pass, is simply the extension of the existing tax credit for an additional six months. However, there are proposals to extend the tax credit another year, to make the tax credit available to ALL homebuyers, not just first-time buyers and, lastly, to increase the credit to $15,000. While these other variations are fine to propose, the concern that I have is that they are a distraction from the real issue, which is simply extending the credit so that the momentum in the housing market continues. If the decision is whether or not to extend the existing tax credit then the answer is simply yes or no. What these other proposals do is take the focus off of just extending the tax credit and now create a whole new discussion and debate about whether these other proposals make sense. The $15,000 tax credit proposal has already been voted down in the past as was making the tax credit available to ALL homebuyers. This economy needs the momentum of the housing market to continue forward otherwise we risk undoing much of the progress that we have made due to the tax credit. The focus should be on 1) whether to extend the tax credit at all, and 2) for how long (i.e., 6 months or 1 year). I will keep you informed of any developments as I find out about them so stay tuned.