Is The Tax Credit For Repeat Homebuyers Helping The Economy?

Realtors discuss the affects of the homebuyer tax credit.

When the first-time homebuyers tax credit of up to $8,000 was extended last November, Congress also added the repeat-buyer tax credit of $6,500 to be used for homeowners to sell their current home and purchase another one. With the high unemployment rate, the higher credit scores wanted by lenders since earlier this year, the upside down state of home sales, and the horrible winter weather in much of the country, homeowners are just not moving.

The incredibly low interest rates, along with the repeat-buyer tax credit, were supposed to bolster the sale and purchase of homes for repeat homebuyers. More buyers would stablize the slow housing market.  This sounds great in theory. However, while the first-time homeowner tax credit is helping buyers, the repeat-buyer tax credit is just not having the desired affect anticipated by Congress.

Local, rather than national, economies will benefit from both the first-time and repeat tax credits in the form of increased sales, even if not as high as needed. Real estate agents, title officers, lenders, appraisers, home inspectors, furniture & appliance retailers and other businesses will be the beneficiaries of these credit funds.

Do you qualify for the repeat-homebuyer tax credit? According to the National Association of Realtors, current homeowners must have used the home being sold or vacated as a principal residence for five consecutive years within the last eight, and a purchase contract must be signed by April 30, 2010.  The full tax credit will be available to taxpayers with the modified adjusted gross incomes up to $124,000 or $225,000 for joint filers. Those with MAGI between $124,000 and $145,000 — or $225,000 and $245,000 for joint filers — are eligible for a reduced credit (see our post on income caps and limits for more information).

It is doubtful this credit will be extended, so take advantage of it now!

Photo Credit: Realtor Action Center on www.flickr.com